Samm's Department Store Operates Three Departments (A, B and C)

question 3

Essay

Samm's Department Store operates three departments (A, B and C). If total costs of $4,500 are to be allocated on the basis of square feet of space (Dept. A = 1,500 Sq. Ft.; Dept. B = 900 Sq. Ft.; Dept. C = 600 Sq. Ft.) then Dept A's share (in percent) of the $4,500 cost would be __________%; Dept. B would be ________%, and Dept C would be ____________%. The amount of cost allocated to Dept. C would be $__________.

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Definitions:

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are written off to expense only when they are determined to be non-recoverable.

Adjustment

An entry made in accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.

Percent of Sales Method

A financial forecasting tool used to estimate certain balance sheet and income statement accounts based on a projected sales figure.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and are written off as a bad debt expense.