Does amazon.com use the direct write off or allowance

Assignment Help Accounting Basics
Reference no: EM131125555

Wigs Plus Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Wigs Plus prepared the following aging-of-receivables schedule as of the end of business on December 31, 2010:



Wigs Plus Company has a past history of uncollectible accounts by age category, as follows:
Percent

Age Class Uncollectible
Not past due............. 2%
1-30 days past due......... 4
31-60 days past due..........10
61-90 days past due......... 15
91-120 days past due.......... 35
Over 120 days past due....... 80

Instructions

1. Estimate the allowance for doubtful accounts, based on the aging-of receivables schedule.

2. Assume that the allowance for doubtful accounts for Wigs Plus Company has a negative balance of _$1,710 before adjustment on December 31, 2010. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts.

3. Wigs Plus Company reported credit sales of $4,000,000 during 2010. Assume that instead of using the analysis of receivables method of estimating uncollectible accounts, Wigs Plus Company uses the percent of sales method and estimates that 1.75% of sales will be uncollectible. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts using the percent of sales method.

4. Assume that on February 10, 2011, Wigs Plus wrote off the $3,500 account of Lasting Images as uncollectible. Illustrate the effect on the accounts and financial statements of the write-off of the Lasting Images account.

5. Assume that on May 17, 2011, Lasting Images paid $3,500 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Lasting Images account.

6. Assume that instead of using the allowance method, Wigs Plus uses the direct write-off method. Illustrate the effect on the accounts and financial statements of the following:

a. The write-off of the Lasting Images account on February 10, 2011.

b. The reinstatement and collection of the Lasting Images account on May 17, 2011.

7. Does Amazon.com use the direct write-off or allowance method of accounting for uncollectible accounts receivable?Explain. 

Reference no: EM131125555

Questions Cloud

Problem or issue related to patient care quality : Addresses a problem or issue related to patient care quality - identifies at least one evidence-based solution that may resolve the problem or issue.
Security consultant at small-growing landscaping business : You have been hired as an IT security consultant at a small but growing landscaping business in Storrs. As a first step you want to educate the owner on what the following mean, what they are used for and why it is important for his busine
Intermediate calculations and round your final answer : A 20-year annuity pays $1,950 per month, and payments are made at the end of each month. If the interest rate is 11 percent compounded monthly for the first ten years, and 7 percent compounded monthly thereafter, what is the present value of the a..
Research the benefits of information systems : Create a Microsoft Word document  Research three different brands of computers using an Internet search engine (e.g. GoogleTM, BingTM, YahooTM,etc.).Research the benefits of information systems in the work environment.
Does amazon.com use the direct write off or allowance : Assume that on May 17, 2011, Lasting Images paid $3,500 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Lasting Images account.
The first three months of operations : Pet Joy Wholesale Inc., a pet wholesale supplier, was organized on May 1, 2010. Projected sales for each of the first three months of operations are as follows:
Position of business intelligence associate : You are being interviewed for the position of Business Intelligence associate in the airport-flight-scheduling department at Bradley International Airport. The BI manager asks you what you know about simulation techniques and forecasting techniques. ..
Medicare and medicaid-legislative actions : Explain the positive and negative aspects of these forces that act against each other, in case of government healthcare programs such as Medicare and Medicaid. How do these two forces play a part in the development of healthcare policy relative to go..
Find the dimension for the package : A microwave cup-of-soup package needs to be constructed in the shape of cylinder to hold 550 cubic centimeters of soup. Find the dimension for the package that will minimize production cost

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd