Reference no: EM132652756
The dataset provided with this chapter includes data for the allowance for doubtful account receivable accounts of six members of the Dow 30 from 2016 to 2018. For each company and year, the data starts with the beginning balance in the allowance for doubtful accounts, adds bad debt expense, subtracts write-offs, and then adjusts for amounts charged to other accounts.
William R. Pasewark and Mark E. Riley (Journal of Accountancy, September 2009, pages 40-44) discuss three techniques for analyzing estimates of uncollectible receivables. Pasewark and Riley note that all of the benchmarks (referenced below) are based on their opinions and might differ based on specific circumstances. You will use these techniques to assess estimates made by Chevron, Cisco, Coca-Cola, Dow, Microsoft, and Verizon during the period 2016 to 2018.
Question 1. The first technique compares cumulative bad debt expense recorded over a multi-year period to write-offs over that same period. Pasewark and Riley state that 1.0 is a general benchmark for this ratio. Compute this ratio for the 2016-2018 period for each company. Plot the ratios using a histogram. Comment on any differences you note among the companies' ratios and on what they might reflect about the companies' estimation processes. Why might a company record negative bad debt expense (i.e. a credit to expense)?
Question 2. The second technique compares each year's beginning allowance for doubtful accounts balance to write-offs for the same years. Pasewark and Riley note that a figure between 1.0 and 2.0 is a benchmark for a typical year. Compute this ratio for each company and year. In other words, you will compute three ratios for each company. Again, use a histogram to represent the data and comment on any differences you note among the companies' ratios. Are there patterns emerging that are consistent between the two techniques employed thus far? What do the patterns indicate about the companies' tendencies in estimating their allowances for doubtful accounts?
|
Prepare journal entries on may to show the flow of cost
: Prepare Journal entries on May 31, to show the flow of cost through the proper summary T accounts. Assume that sales values were 500,000 on credit.
|
|
How does the program meet your specific needs and goals
: What device do you most often use for your favorite program watching or other chosen media? How does the program meet your specific needs and goals?
|
|
How much were alfahd period costs and product costs
: The following information relates to ALFAHD Corporation (AMOUNTS IN SAUDI RIYAL). How much were ALFAHD period costs and product costs?
|
|
What is the amount of utility bill
: SR 200, your variable cost is SR2 per kilowatt hour, and your monthly activity level is 3,000 kilowatt hours, what is the amount of your utility bill?
|
|
What do the patterns indicate about the companies tendencies
: What do the patterns indicate about the companies' tendencies in estimating their allowances for doubtful accounts?
|
|
What is measured by profitability ratios
: What is measured by profitability ratios? Give an example of how you compute EPS and discuss how it is used to measure profitability.
|
|
Create line item budget
: Create a line item budget for the agency. Identify which level of government uses the budget (federal, state, and/or city).
|
|
What is the remaining balance of the loan after 2 years
: As the compound interest rate increases, the present value of future cash flows decreases. True False
|
|
Public Policy in the US Federal System
: Effective public administrators, as well as effective citizens, must be well informed about public policy.
|