Bailey's Manufacturing Company is looking at changing their method of reporting bad debts expense. In past years the company has been able to use the direct write off method but have experienced significant growth in recent years. The accountants have prepared the following aging schedule based upon their current accounts receivable volume
Required:
1) Using the above information compute the estimated amount of uncollectible receivables.
2) Prepare the journal entry to record the estimated uncollectibles.
3) Instead of the aging method compute the estimated bad debts to be:
a) 2.5% of net credit sales.
b) 3.5% of gross accounts receivable
Definitions:
Need For Contact
The intrinsic human requirement for social interaction and physical touch.
Aggression
Various activities that have the potential to inflict harm, either physically or mentally, on oneself, other individuals, or environmental entities.
Emotional Shock
A psychological condition resulting from a traumatic event, leading to feelings of numbness, distress, and overwhelming stress.
Humiliation
A strong feeling of shame or loss of dignity, often resulting from embarrassing or degrading treatment.
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