Problem #3: Accounts Receivable Presentation (8 points) The following items were
ID: 2535867 • Letter: P
Question
Problem #3: Accounts Receivable Presentation (8 points)
The following items were taken from the 2017 GAAP financial statements of Leone Horticultural Co.:
In the balance sheet:
12/31/2017
Accounts receivable, net of an allowance of $525,000
$8,852,400
In the income statement:
2017
Net sales
$35,722,600
Bad debts expense
(740,000)
a. Identify the amount of each item below based on the 2017 GAAP financial statements of Leone Horticultural Co. (1 point per item = 5 points)
b.
Indicate your responses to this question by writing an “X” in the appropriate boxes.
Leone Horticultural Co. uses the allowance method to account for bad debts under GAAP and, accordingly, recognizes bad debts expense in its GAAP income statement when:
(1 point per item = 3 points)
YES
NO
1)
Management estimates the allowance for probable credit losses on the existing accounts
2)
Actual customer accounts are written off as uncollectible
3)
Customer accounts become past due generally when they are outstanding beyond eleven or sixteen days from invoice
The following items were taken from the 2017 GAAP financial statements of Leone Horticultural Co.:
In the balance sheet:
12/31/2017
Accounts receivable, net of an allowance of $525,000
$8,852,400
In the income statement:
2017
Net sales
$35,722,600
Bad debts expense
(740,000)
Explanation / Answer
b. YES NO 1 Management estimates the allowance for probable credit losses on the existing accounts X 2 Actual customer accounts are written off as uncollectible X 3 Customer accounts become past due generally when they are outstanding beyond eleven or sixteen days from invoice X
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.