Brasser Co. started using the percentage of sales method to account for bad debts in 2012. In 2011, the company's first fiscal year, the company had used the direct write-off method because the amount of bad debts was judged to be immaterial. The following information relates to the company's sales and receivables.
Required:
a. Calculate the correct balance in the allowance for doubtful accounts (ADA)at the end of 2012. Remember to include the effect of the change in accounting policy on 2011 accounts.
b. Record the write-off entry for 2012 and the year-end adjusting entries for 2012 to adjust the ADA. (Ignore income tax effects)
Definitions:
Sabotage
Deliberate actions aimed at damaging, disrupting, or undermining the operations, plans, or success of opponents or enemy forces.
Proclamation of Neutrality
A declaration made by President George Washington in 1793, asserting that the United States would remain neutral in the conflict between France and Great Britain.
Warring Powers
States or entities involved in a conflict, typically engaged in comprehensive military actions against one another.
Bolshevik Revolution
The Bolshevik Revolution, also known as the October Revolution, occurred in 1917 in Russia and led to the overthrow of the Provisional Government and the establishment of a Communist state.
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