Figure 8-2
Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2016 are as follows:
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January 2016 sales is projected at 16,000 lamps.
-Refer to Figure 8-2. How many lamps should be produced in October?
Definitions:
Bad Debts Expense
The cost associated with the estimated amount of receivables that a company is unable to collect from its customers.
Balance Sheet Approach
A method used for estimating uncollectible accounts by analyzing the accounts receivable on the balance sheet.
Bad Debts Expense
The portion of receivables that are estimated to be uncollectible due to customer defaults.
Bad Debts Recovered
Income received from previously written-off accounts receivable that have unexpectedly been collected.
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