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The chief accountant for Dollywood Corporation provides you with the following list

The chief accountant for Dollywood Corporation provides you with the following list of accounts receivable written off in thecurrent year:

Date                                                                      Customer                                                     Amount

March31                                                             E.L. MastersCompany                         $7,800


June30                                                                 HockingAssociates                                9700


September 30                                                 Amy Lowell's DressShop                    7000


December 31                                                  R. Bronson,Inc.                                          9830

Dollywood Corporation follows the policy of debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this procedure is appropriate for financial statement purposes because the Internal Revenue Service will not accept other methods for recognizing bad debts.


 All of Dollywood Corp.'s sales are on a 30-daycredit basis. Sales for the current year total $2,400,000, and research has determined that bad debt losses approximate 2% ofsales.

Instructions:
(a) Do you agree or disagree with Dollywood's policy concerning recognition of bad debt expense? Why or Why not?

May 01 2018 View more View Less

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