Financial accounting week 6 critical thinking

Aug 1st, 2015
Price: $10 USD

Question description

Module 6: Critical Thinking

View Grade Info
Grade: N/A

Critical Thinking Assignment (130 points)

Important! Read First

Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. 

Option #1: Nebraska Bookshop Financial Review

Nebraska bookshop specializes in used, rare, and out-of-print books. The store has a large base of repeat customers who purchase books on 30-day accounts. At 15 days overdue, each customer gets a phone call from Nebraska requesting payment. Nebraska has experienced a high success rate with this collection effort. Nebraska’s CPA is preparing year-end financial statements, and the company has asked him for his estimate of uncollectible accounts. Nebraska has a balance of $65,000 in the accounts receivable account at the end of the year. The CPA has analyzed the company’s uncollectible accounts using an aging of the accounts receivable. He estimates that only 2.5% of his accounts receivable balance will not be collected. The allowance for doubtful accounts has a credit balance of $210 in the trial balance. 

Complete the following:

  1. Prepare the journal entry to record the bad debts expense at year end.
  2. Show the balance sheet presentation of the accounts receivable account.
  3. Determine and specify the amount of bad debts expense that appears on the income statement. Describe how this amount is classified.
  4. Describe the justification, if any, for Nebraska to use the direct write-off method for accounting for uncollectible accounts.
  5. Indicate three or four measures Nebraska can implement to minimize his write-offs and explain why investors would be concerned about write-offs.

Your response should include 2-3 pages of written text in addition to any calculations and solutions you offer to support your thinking. Document formatting and any citations should conform to CSU-Global Guide to Writing and APA Requirements.

Option #2: Financial Statement Research

You have just landed an accounting position with a national telecommunications company. Because this is your first job you are eager to please your co-workers and your supervisor, who works closely with the controller. Your supervisor has just paid you a visit, and she told you that the controller is concerned that profits for the last fiscal year are much less than profits for the preceding five years. The controller has asked that depreciation on a machine purchased at the beginning of last year be recalculated. The machine has a five-year useful life and is depreciated using the straight-line method. The controller has asked that the machine be depreciated over a ten-year useful life. Your supervisor contends that the “depreciation thing” really doesn’t matter because the machine has already been paid for. In addition, your supervisor gives you an adjusting journal entry to correct what she calls “expense transfers.” This entry transfers items originally recorded as repairs and maintenance to capital assets. 

Address the following:

  1. Do you agree with the supervisor regarding the change in the estimated useful life of the machine? Why or why not?
  2. Are you going to recalculate the depreciation and change the entry? Why or why not?
  3. What is the proper accounting treatment for: (a) repairs and maintenance and 
    (b) plant assets?
  4. What is your supervisor trying to accomplish with the suggested “expense transfers” entry? What would be your course of action regarding the suggested entry?

Your response should include 2-3 pages of written text in addition to any calculations and solutions you offer to support your thinking. Document formatting and any citations should conform to CSU-Global Guide to Writing and APA Requirements.

Posted Fri Jun 19, 2015 at 6:13 am

Tutor Answer

(Top Tutor) Daniel C.
School: Rice University

Studypool has helped 1,244,100 students

7 Reviews

On Time
Dec 3rd, 2016
" Excellent job "
Nov 20th, 2016
" all I can say is wow very fast work, great work thanks "
Nov 6th, 2016
" Awesome! Exactly what I wanted. "
Oct 28th, 2016
" Goes above and beyond expectations ! "
Oct 15th, 2016
" Top quality work from this guy! I'll be back! "
Oct 6th, 2016
" Excellent work as usual "
Sep 22nd, 2016
" AMAZING as always! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1826 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors