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a. Do you anticipate any significant collection problems? Why does the allowance for bad debts have a debit balance?
Early in the year we wrote off $65,000 of receivables. Nick, Ray, and I agreed we would lose another $30,000 from the open accounts as of December 31, 20X4. That's reflected in the listing of S&A costs. The allowance for bad debts was just a "squeeze."
b. Were shop supplies inventoried on December 31? Did you adjust the financials to the ending count?
Shop supplies were inventoried on December 31 and their costs were computed from the latest invoices. The account was adjusted to the count.
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