Bad Debt Expense Memo

Nonetheless, as we all know the recession and economic changes affecting the women’s apparel industry during late 1980s and early 1990s. As a consequence, it is an indicator that Leslie Fay suspected to overstate its inventory in order to overstate its current asset. According to Account Receivable and Inventories two accounts, there is 10.8% increase in Leslie Fay’s current asset from 1987 (60.9%) to 1990 (71.7%). As far as I can see, Account Receivable and Inventories are the two main accounts which caused an unusual and inconsistent gain in total current asset in four years. Thirdly, there is unusual gain in PP&E account from 1990 (6.8%) to 1991 (9.9%). However, other accounts under Current Asset such as Inventories and Accounts Receivable started to decrease in 1990 and PP&E is the only account that increased 3.1% in one year. Also, I cannot find any equipment and estate purchased by Leslie Fay from 1990 to 1991. As a result, I suspect it might have fraud happened in Leslie Fay. Additionally, there is an unusual decrease in Long-term Debt account from 1990 to 1991. More specifically, the Long-term Debt decreased less than 10% from 1987 (38.2%) to 1990 (29.6%). While, it decreased 8.3% from 1990 (29.6%) to 1991 (21.3%) in one year. As far as I can see, this is an unusual and inconsistent decrease of Long-term Debt and it indicated Leslie Fay suspect to understate its

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

Fraser, L. M., & Ormiston, A. (201). Understanding financial statements (9th ed.). Upper Saddle River, NJ: Prentice Hall.

A profit and loss account is supposed to show a businesses’ income and expenditures and calculate the company’s net profit or loss based on the difference between those numbers. It is really useful in determining past performance and to try to predict future

Prepare the adjusting journal entry(s) necessary for uncollectible accounts expense using the aging of accounts receivable of accounting for bad debts as computed on the worksheet (these must be handwritten).The entry must be included with your other journal entries to receive credit.

A profit and loss account is intended to show a business its income and expenditures and calculate the company’s net profit or loss based upon the difference between those figures. It is extremely useful in determining past performance and to try and predict future results. It enables a business to see what changes could make to improve on its profit. It also give enough information to help a business to set targets.

1. The Allowance for uncollectible accounts currently has a credit balance of $900. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $15,000. What will be the amount of uncollectible accounts expense reported on the income statement?

◦ If the asset group is tested for recoverability while it is classified as held

Some individuals assume that the usefulness of financial statements is to predict the future of a business with data from the past. Sometimes this can be true in respect for trends that have continued for many years, for at least the near future. The fact is financial

Fictitious reductions of expenses improve the bottom line on financial statements and can mask true losses and debt. (Crumbley, Heitger and Smith, 2013). An airline has a large fleet of aircraft that require extensive routine maintenance costs. In times of unprofitability, the airline might improve earnings by recording additional upgrades to planes as expenses by deferring losses to future periods. GAAP section 39.200 provides details around how capital assets should be recorded on the balance sheet and the associated depreciation should be recorded (GAAP, 2015).

By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature

During 2012 sales on account were $145,000 and collections on account were $86,000. Also, during 2012 the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $54,000. The change in the cash realizable value from the balance at 12/31/11 to 12/31/12 was (Points : 2)

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Each user of the financial statements interprets the information in a different manor. They use the information to determine their interactions with the organization. Management, investors, and employees use the same information from the financial statements but for different purposes. These four basic statements are the fundamentals of accounting which can be much more detail and complex. They do not need to be more complex for the users of the information; these basic statements have all the information needed to make

It is important for every business to carry out financial statement analysis in order to gain an understanding of their current financial status. There are two main types of financial statements that businesses commonly use when it comes to financial analysis. These are known as the Profit and Loss Account and the Statement of Financial Position. A profit and loss account consists of a list of expenses incurred by the company, against their revenues over a certain period of time. It shows whether the organisation