The Intercontinental Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of

 
   

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The Intercontinental Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of all new sales. Sales for four consecutive years and year-end allowance account balances were as follows: Year ……………….Sales………. Allowance for Bad Debts End-of-Year Credit Balance 2010 . . . . . . . . $3,000,000………………………………………………………….. $ 44,600 2011 . . . . . . . . 2,850,000……………………………………………………………. 61,600 2012 . . . . . . … 3,600,000……………………………………………………………. 82,800 2013 . . . . . . . . .3,940,000…………………………………………………………… 123,000 1. Compute the amount of accounts written off for the years 2011, 2012, and 2013. 2. The external auditors are concerned with the growing amount in the allowance account. What action do you recommend the auditors take? View Solution:
The Intercontinental Publishing Company follows the procedure of debiting Bad