S & R Company Uses the Aging of Accounts Receivable

question 14

Essay

S & R Company uses the aging of accounts receivable approach to estimate bad debt expenseCalculate the amount of allowance for doubtful accounts that should be reported on the balance sheet at December 31, 2015.(b)Calculate the amount of bad debts expense that should be reported on the2015 income statement, assuming that the balance of Allowance for Doubtful Accounts on January 1 was $44,000 (credit balance)and accounts receivable written off during the year totaled $49,200.(c)Present the appropriate general journal entry to record bad debts expense onDecember 31, 2015.(d)Show how accounts receivable will appear on the balance sheet at December31, 2015.

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Definitions:

Above-Equilibrium Wage Rates

Wages set above the market equilibrium, often leading to surplus labor supply or unemployment, as employers demand less labor at higher wage rates.

Opportunity Cost of Shirking

The benefits a worker forgoes by choosing to shirk (reduce their level of effort or productivity) at work, which could include potential wage increases, promotions, or job security.

Shirking

The action of avoiding or escaping from work or duties.

Monitoring Costs

Expenses involved in overseeing and controlling the performance of a business or investment.