Magnolia, Inc

question 196

Essay

Magnolia, Inc., manufactures bedding sets. The budgeted production is for 55,000 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 31,000 yards with the desired ending balance of 30,000 yards of material. If the material costs $4 per yard, determine the materials budget for the year.

---

Definitions:

Written off Accounts

Accounts deemed uncollectible and therefore removed from the accounts receivable balance in the financial statements.

Allowance for Doubtful Accounts

An estimate of the receivables that may not be collected, reducing gross receivables to a more realistic net value.

Uncollectible Receivables

Accounts receivable that a company has determined are unlikely to be collected and thus are written off as a bad debt expense.

Bad Debt Expense

An expense reported on the income statement, reflecting the cost of debts that are deemed uncollectible.