Georgia Company reported accounts receivable of $ 16.5 millionat the end of its 2007 fiscal year. This amount was net of anallowance for doubtful accounts of $ 1,800,000. During 2008,Georgia sold $ 56.5 million of merchandise on credit. It collected$ 57.9 million from customers. Accounts valued at $ 1,980,000 werewritten off as uncollectible during 2008. Georgia'smanagement estimates that 10% of the year- end Accounts Receivablebalance will be uncollectible.
Answer each of the following questions:
A. What amount will Georgia report for accounts receivable and the allowance for doubtful accounts at theend of 2008?
B. What is the Doubtful Accounts Expense for 2008?
C. How will the accounts receivable and allowance accounts be presented on the balance sheet? Show thebalance sheet.
D. Why do companies record expenses fordoubtful accounts based on estimates from receivables or salesduring the prior year rather than recording the expenses whenaccounts are written off in a future period?
E. If estimated uncollectibles as apercentage of sales or receivables were to increase over severalyears, what information might this provide to decision makers?