Brasser Co Required:
A

question 14

Essay

Brasser Co. started using the percentage of sales method to account for bad debts in 2021. In 2020, 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.
$$\begin{array} { | l | r | r | } \hline & 2020 & 2021 \\\hline \text { Credit sales } & \$ 18,750,000 & \$ 18,900,000 \\\hline \text { Estimated bad debts as a percentage of credit } & & \\\text { sales } & 0.5 \% & 0.4 \% \\\hline \text { Accounts written off } & 65,750 & 93,600 \\\hline\end{array}$$ Required:
a. Calculate the correct balance in the allowance for doubtful accounts (ADA)at the end of 2021. Remember to include the effect of the change in accounting policy on 2020 accounts.
b. Record the write-off entry for 2021 and the year-end adjusting entries for 2021 to adjust the ADA. (Ignore income tax effects)

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Definitions:

Manie Sans Delire

A historical term describing a condition of mania without delusion, often not used in contemporary psychiatry.

Antisocial Personality Disorder

A mental condition in which a person consistently shows no regard for right and wrong and ignores the rights and feelings of others.

Correctional Service Of Canada

A federal agency responsible for the incarceration and rehabilitation of convicted criminal offenders in Canada.

Psychopathy

A personality disorder characterized by persistent antisocial behavior, impaired empathy, and bold, disinhibited, and egotistical traits.