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##### acc-Allowance method analysis of receivables-the presi?dent of Sonic Sound directed the sales staff ?to move som

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Question;At a January 20X2 meeting, the presi?dent of Sonic Sound;directed the sales staff ?to move some product this year.? The president noted;that the credit evaluation department was being disbanded be?cause it had;restricted the company?s growth. Credit decisions would now be made by the;sales staff.;By the end of the year, Sonic had generated significant;gains in sales, and the president was very pleased. The following data were;provided by the accounting department;20X2 20X1;Sales \$23,987,000 \$8,423,000;Accounts Receivable, 12/31 12,444,000 1,056,000;Allowance for Uncollectible Accounts, 12/31? 23,000 cr.;The \$12,444,000 receivables balance was aged as follows;Age of Receivable Amount Percentage of Accounts Expected to;Be Collected;Under 31 days \$4,321,000 99%;31260 days 4,890,000 90;61290 days 1,067,000 80;Over 90 days 2,166,000 60;Assume that no accounts were written off during 20X2.;Instructions;a. Estimate the amount of Uncollectible Accounts as of;December 31, 20X2.;b. What is the company?s Uncollectible Accounts expense for;20X2?;c. Compute the net realizable value of Accounts Receivable at;the end of 20X1 and 20X2.;d. Compute the net realizable value at the end of 20X1 and;20X2 as a percentage of respective year-end receivables balances. Analyze your;findings and comment on the president?s decision to close the credit evaluation;department.

Paper#42489 | Written in 18-Jul-2015

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