1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
STALIN [3.7K]
3 years ago
9

There are 2 methods of accounting for uncollectible receivables: Direct Write-Off and Allowance methods. Describe and compare th

ese methods. Make sure to include how estimates can be calculated for the Allowance method.
Business
2 answers:
Artist 52 [7]3 years ago
5 0

The correct answer is B: direct write-off method

Explanation:

Unfortunately, some sales on account may not be collected. Customers go broke, become unhappy and refuse to pay, or may generally lack the ethics to complete their half of the bargain. It is necessary to establish an accounting process for measuring and reporting these uncollectible items. Uncollectible accounts are frequently called “bad debts.”

There are two methods of accounting to manage uncollectable accounts:

1- Allowance method

2- Direct Write-off Method

2- Under this method, there is no allowance account. An account receivable is written-off directly to expense only after the account is determined to be uncollectible. This method is required for income tax purposes. The direct write-off method is easy to operate as it only requires that specific debts are written off as they are identified with a simple journal. The problem with the method, however, is that it does not comply with the matching principle, in that revenue might be recorded in one period, when the customer is invoiced, whereas the expense of writing off the uncollectible amount is recorded in a completely different period when the amount is identified as irrecoverable.

Kruka [31]3 years ago
3 0

The direct write off does not report about the bad debt and does not use the allowance where as the allowance method uses the allowance for doubtful accounts because it provides an estimate for the same.

<u>Explanation:</u>

The allowance method speaks to the accumulation and accrual basis of bookkeeping and is the acknowledged technique to record uncollectible records for monetary bookkeeping purposes. The direct write off method is utilized just when we choose a client won't pay.

The allowance method utilizes the stipend for doubtful records to catch amassed assessments of awful obligations. The direct write-off method does not report bad debt estimates; therefore, it does not use the allowance for doubtful accounts when reporting bad debts.

You might be interested in
On January 1, Year 1, Barnes Company issued a $100,000 installment note. The note had a 10-year term and an 8 percent interest r
Over [174]

Answer:

e) $93,097

Explanation:

Interest for 1st year = $100,000*8%

Interest for 1st year =$8,000

Principal repayment for 1st year = $14,903 - $8,000

Principal repayment for 1st year = $6,903

Principal balance on January 1,Year 2 = $100,000 - $6,903

Principal balance on January 1,Year 2 = $93,097

3 0
3 years ago
1. How is Unilever applying its understanding of internal consumer processes in the psychological core to market its products?
Vedmedyk [2.9K]

Answer:

Unilever is applying its understanding of internal consumer processes by using several points of the psychological core to market its product in order to create valuefrom customers in return. ... It creates a relationship between the customer and the brand.

Explanation:

3 0
3 years ago
A common size analysis requires the representation of financial statement data relative to a single financial statement item (or
MArishka [77]

Answer:

The correct answer is letter "C": Total assets.

Explanation:

Total assets represent the total amount of assets that an individual or entity possesses to obtain a return from them. In accounting, it is obtained by subtracting the previous period total assets minus the current period total assets. They appear in the Balance Sheet of a company and is the baseline or common base item to which other line items are expressed.

7 0
3 years ago
Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours
vivado [14]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 375,000/12,500= $30 per machine hour

B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 30*13,150= $394,500

C) Over/under allocation= real MOH - allocated MOH

Over/under allocation= 387,920 - 394,500= 6,580 overallocated

6 0
3 years ago
The OpenOffice.org software program creates files with the _______ file extension.
zaharov [31]
I think the answer is .odt.
4 0
3 years ago
Read 2 more answers
Other questions:
  • Consider the following information.
    6·1 answer
  • The ledger of Mai Company includes the following accounts with normal balances: Common Stock, $9,000; Dividends, $800; Services
    13·1 answer
  • When identifying a problem, leaders actively seek to identify its _______________, not merely the symptoms on the surface as sym
    14·1 answer
  • What are goods or services state taxes provides
    13·1 answer
  • the principal represents an amount of money deposited in a savings account subject to company interest...find how much money wil
    13·1 answer
  • Shelley’s Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last y
    8·1 answer
  • 1. Sharon, a newly engaged woman, saw an advertisement in a bridal magazine for a beautiful pearl necklace priced at $69.99 from
    14·1 answer
  • Many firms advertise. What effect does advertising have on firm​ profits? One possible effect of advertising is to:_________
    10·1 answer
  • 100 point givaway
    10·1 answer
  • What is the goal of effective marketing research studies?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!