Abundant Returns
This Company Sells Its Merchandise Only on Credit

question 44

Essay

Abundant Returns
This company sells its merchandise only on credit.The following data are available at December 31,2012.
$\begin{array}{ll}\text {Sales } &\$ 411,000 \\\text { Sales returns and allowances} &12,000 \\\text { Account s receivable at January 1,2012 } &89,000 \\\text { Allowance for doubtfil accounts at January 1, 2012 } &4,100 \\\text { Cash collections during 2012 } &385,100 \\\text {Accountswritten off as uncollected during 2012 } &3,600\end{array}$
-Refer to Abundant Returns.The firm estimates that bad debts could be 2% of net sales.
A) What amount will the company recognize as bad debts expense for the year?
B) Assume that the company has a balence of Accounts Receivable of $\$ 108,900$ , and an Allowance for Doubtful Accounts of $\$ 820$ . What will be the net realizable value once the adjustment from (Part $A)$ is made?

Understand the relationship between personality traits, job engagement, and job performance.

Recognize the multidimensional nature of certain personality traits and their implications for work.

Acknowledge the role of positive and negative affectivity in work outcomes and personal success.

Understand the impact of market conditions such as surplus or shortage on prices.

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Definitions:

Return on Total Assets

A financial ratio that measures a company's ability to generate earnings from its total assets.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental, that pays back with interest.

Par Value

The stated value or face amount of a bond, stock share, or coupon as declared by the issuing entity.

Journal Entry

A record in the books of accounts that notes the details of a financial transaction.