The ledger of Windsor, Inc. at the end of the current year shows Accounts Receivable $84,000; Credit Sales $830,000; and Sales R
eturns and Allowances $44,000. (a) If Windsor uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Windsor determines that Matisse’s $800 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 11% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $400 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.
A fixed budget can be regarded as financial plan which is not been modified for any variations that could come up in actual activity. In most times some companies may have experience of substantial variations as regards their expected activity levels within the encompassed period of budget as well as the amounts in that budget. The budget cost allowances in a fixed budget for each cost item cannot be changed as regards the variable items. It should be noted that in Fixed budget the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur.
