Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 7 - Cash and Receivables - Concepts for Analysis - Page 422: CA7-11a

Answer

The controller should not be concerned with Marvin Company’s growth rate in estimating the allowance.

Work Step by Step

The accountant’s proper task is to make a reasonable estimate of bad debt expense. In making the estimate, the controller should consider the previous year’s write-offs and also anticipate economic factors which might affect the company’s industry and influence Marvin’s current write-off.
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