Dependable Tires Company uses the indirect method to prepare the statement of cash flows.Refer to the following comparative balance sheet for Dependable Tires Company and complete the third column to show the increases or decreases.
Dependable lires Company Comparative Balance Sheet December 31,2018 and 2017 Cash Accounts Receivable Merchandise Inventory Total Assets Accounts Payable Accrued Liabilities Long-term Notes Payable Total Liabilities Common Stock Retained Earnings Treasury Stock Total Stockholders’ Equity Total Liabilities and Stockholders’ Equity 2018$39,60026,400204,000$270,000$4,8002,400100,800108,00036,000135,600(9,600162,000$270,0002017$19,80038,500126,500$184,800$6,6001,10099,000106,7002,20081,400(5,500)78,100$184,800 Increase/ Decrease
Definitions:
Bad Debt Expense
An expense recognized when a company determines that a customer's debt is no longer collectible.
Cash Realizable Value
The amount of money that could be realized from assets if they were sold, after settling any associated costs.
Allowance Method
The allowance method is an accounting technique that enables companies to anticipate and adjust for expected bad debts or credit losses in their financial statements.
Direct Write-off Method
Accounting practice where uncollected receivables are directly written off against income when deemed uncollectible, without using an allowance account.