Stiller Company Uses the Allowance Method to Account for Bad

question 9

Essay

Stiller Company uses the allowance method to account for bad debts.
In the first year of operations (2014),Stiller sold $540,000 of merchandise on credit,including a $2,500 sale to Bubba Long.On December 31,2014,it provided an addition to its allowance for doubtful accounts equal to 1.8% of its credit sales.On June 1,2015,Stiller wrote off as uncollectible the $2,500 account of Bubba Long; and on December 25,2015 Bubba Long unexpectedly paid his account in full.
Prepare the journal entries that Stiller Company should make:
(a)On December 31,2014,to increase the allowance for doubtful accounts.
(b)On June 1,2015,to write off the bad debt.
(c)On December 25,2015,to record the unexpected collection from Bubba Long.

Understand the principles of causality and the limitations of certain research methods in establishing cause-effect relationships.

Identify the concepts of testability and parsimony as critical features of scientific theories and research.

Understand the concept of globalization of operations including examples and strategies.

Recognize the importance of key success factors (KSFs) in achieving competitive advantage.

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Definitions:

Inventory Specialist

A professional responsible for managing and overseeing the goods or merchandise available in a company's inventory, ensuring accuracy and optimal stock levels.

Year-end Report

A summary of an organization's financial and operational performance at the end of a fiscal year.

Merchandise

Goods that are bought and sold in any business activity.

Business Environment

Refers to the combination of internal and external factors that influence a company's operating situation, including economic, legal, technological, and competitive aspects.