Assume ID Can Estimate Uncollectible Accounts Accurately, Accrues Bad Debts

question 170

Essay

Assume ID can estimate uncollectible accounts accurately, accrues bad debts at 5% of sales, and recognizes revenue upon transfer of title.
Required: Prepare journal entries to record the sale, cash collections, and recognition of gross profit (if appropriate) in 2012 and 2013.

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Definitions:

Accountant-client Privilege

A legal privilege that keeps communications between an accountant and their client confidential, similar to attorney-client privilege.

Common Law

The body of law derived from judicial decisions and customs, as opposed to statutes or written laws enacted by legislative bodies.

Federal Law

Laws passed by the national government of the United States that apply to the entire country, encompassing statutes, regulations, and case law.

Private Securities Litigation Reform Act

A 1995 federal law that imposed several significant reforms on the process of bringing securities fraud lawsuits in order to reduce frivolous claims.