New Rock,Inc

question 137

Essay

New Rock,Inc.sells video games it has purchased from a local distributor.The following static budget is based on sales of 8,000 games.However,New Rock only sold 7,800 games during the year.Fixed costs are 30% of total operating expenses

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Definitions:

Net Accounts Receivable

The amount of money owed to a company by its customers for goods or services provided, after accounting for any allowances for doubtful accounts.

Allowance Method

An accounting technique used to estimate bad debts and adjust accounts receivable to reflect only receivables expected to be collected.

Uncollectible Account

A receivable that a company has deemed unlikely ever to be collected and is therefore written off as a bad debt expense.

Trade Accounts Receivable

Amounts owed by customers to a business, specifically from sales transactions.