Chp 6 problems Sheet1

Thomas steen the auditors of bauers nancial statements

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Unformatted text preview: llowance method. 2, Discuss the advantage of the allowance method when compared to the direct method with respect to the matching principle. E 6 ­29 Accoun+ng for Uncollec+ble Accounts Receivable Mahogany Company had the following informa+on rela+ng to its accounts receivable at Accounts receivable balance at 12/31/11 $750,000 750,000 Allowance for bad debts at 12/31/11 (credit balance) 45,000 Gross sales during 2012 (all credits) 3,500,000 Collec+ons from customers during 2012 3,075,000 Accounts wri_en off as uncollec+ble during 2012 50,000 Es+mated uncollec+ble receivables at 12/31/12 90,000 E 6 ­33 Comparing the Percentage of Sales and the Percentage of Receivables Methods Bauer Company uses the percentage of sales method for compu+ng bad debts expense. As of Jan 1, 2012, the balance of Allowance f...
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