Nitz Furniture & Piano Center

Nitz Furniture and
Piano Center
Aniceta Julia Marianne Mae Azon
Photos of the
Business
Photos of the Business
Background of
the Business
Profile of the Business
Name of the business: Nitz Furniture and Piano Center

Owner: Engr. Nestor L. Flores
Nature of the business: Sole proprietorship
Type of business: Furniture and Piano Shop
(Manufacturing)
Address: #144 Peafrancia Avenue, Naga City
History of the Business
Nitz Furniture and Piano Center started as a simple piano repair shop in 1978 when the
piano company Eferendo Flores worked at in Manila closed because of the Martial Law during the
Marcos regime. They then decided to start making pianos because they had a connection with a
supplier of wood.
During the 1980s, they started to manufacture furniture, since they have the materials
to do so. They started researching and hired workers to assemble the furniture. Unfortunately,
their supplier closed due to lack of raw materials because of deforestation issues; they had a hard
time looking for alternative suppliers.
In 1995, Engr. Nestor Flores and Francia Rosario Solis, who inherited their respective
family businesses both were furniture shops and competitors merged them, which is now the
present Nitz Furniture and Piano Center. The company is a home-grown entrepreneur that is
famous for its cosmopolitan, space saving, and multifunctional pieces to fit modern homes.
Existing Organizational Structure
General
Manager
Operations
Manager
Administrative Production
Personnel Workers
Recommended Organizational Structure
Job
Description
General Manager
Job Order & Purchase Transaction
Checks the job order and purchase requisition form for
any discrepancies before producing purchase orders.
If there are discrepancies, he will return the job order
and purchase requisition form to the inventory manager
for some modifications. If there are no discrepancies in
the job order and purchase requisition form, he will
produce two purchase orders sending one copy to the
supplier. The other copy will be sent to the inventory
manager.
Sends the job order form to the production workers.
General Manager
Checks if the purchase order, sales order, and receiving
report all match before issuing the check to be given to
the supplier. If the documents dont match, he will
return it to the clerk. If match, he prepares and issues
check.
Sends the check to the supplier and receives the purchase
invoice.
Gathers and checks all the source documents (purchase
order, purchase invoice, check disbursement voucher,
voucher register, sales order, and receiving report) and
sends it to the bookkeeper.
General Manager
Cash Disbursements Transaction
Receives the bill from the clerk.
Issues a check for the amount needed to pay the
bill.
Forwards the check to the clerk for the payment
of utilities.
Reviews the check disbursement voucher and
voucher register made by the clerk.
Sends the check disbursement voucher and
voucher register to the bookkeeper for recording.
General Manager
Payroll Transaction
Issues check to be given to the clerk for
encashment.
Receives the cash from the clerk.
Distributes salaries to the employees.
General Manager
Petty Cash Transaction (Establishment)
Orders and informs the clerk in the establishment of
the petty cash fund.
Creates a check made out to the clerk in the amount
needed to fund the petty cash to its stated limit
(5,000.00).
Forwards the check to the clerk for encashment.
General Manager
Petty Cash Transaction (Replenishment)
Reviews the source documents such as the official
receipts and petty cash vouchers before issuing check
for the replenishment of the fund.
If there are discrepancies, the official receipts and
petty cash vouchers will be sent back to the clerk for
modifications. If there are no discrepancies, he will
prepare and issue check in the amount needed for the
replenishment of the fund.
Forwards the check to the clerk for encashment.
Operations Manager
Talks to the clients about the quality and design of the
furniture they would like to order and is in-charge of
detailing the design of the furniture on the job order
form, received from the clerk.
Sends the JOF to the inventory manager to check if the
order would require additional raw materials.
Ensures that the finished product is in good quality and
sees to it that the product matches the order of the
customer. If not, it will be sent back to production for
additional modification. If it is in good quality, it will be
sent to the customer along with the charge invoice and
the delivery receipt.
Operations Manager
Revenue and Cash Receipts Transaction
A.Balance
Issues two (2) copies of the charge invoice and delivery
receipt and sends one of each to the customer when
the finished product is sent to them. The other copies
are sent to the clerk as reference for when the
customer pays their balance.
Operations Manager
Payroll Transaction
Receives , reviews and match the payroll register and
payroll slip.
If the documents do not match, it will be returned to
the clerk for modifications.
If the documents match, she will request the general
manager to issue check for the payment of salaries to
the employees.
Inventory Manager
Receives the job order form from the operations
manager to check if the order needs additional raw
materials.
If the order does not need additional raw materials,
she will send the job order form to the production
workers. If the order needs additional raw materials, she
will prepare a purchase requisition form.
Forwards the job order form and purchase requisition
to the general manager for approval.
Inventory Manager
Receives the purchase order, sales order and the
purchased raw materials.
Checks if the purchase order and sales order match
with the materials.
If the items do no match, she informs the supplier of the
discrepancy between the purchase order, sales order, and
the purchased materials. If the items match, she sends the
raw materials to the production workers and she will now
prepare a receiving report.
Forwards the source documents (purchase order, sales
order, and receiving report) to the general manager to
check its accuracy.
Inventory Manager
Places both the excess materials and the work in
process inventory inside the stockroom.
Updates the inventory report.
Production Workers
Assembles the order of the customers. They base it from
the job order form, which they received from the general
manager.
Paints/varnishes the assembled product.
Sends finished product to the operations manager for
quality inspection.
Sends product still in process to the inventory manager
and have her update the inventory report.
Returns excess raw materials to the inventory manager.
Production Workers
Payroll Transaction
Fills out the daily time record every day.
Receives the payroll register, payroll slip, and cash
representing their salary.
Signs on the payroll register as proof that they have
received their salary for the week.
Production Workers
Petty Cash Transaction
Replenishment
Prepares one copy of petty cash voucher.
Sends the PCV to the clerk for approval.
Receives the cash released by the clerk
Pays the vendor/supplier for a small amount (less
than 500.00) of purchases.
Secures the official receipt and forwards it to the
clerk.
Clerk
Receives the order of the customers.
Responsible in preparing two job order forms. One copy
is given to the customer, the other copy will be sent to the
operations manager for approval. If the customer already
has a sketch of their order prepared, it will just be
attached to the form. If the customer does not have
prepared sketch yet, the clerk will inform the operations
manager.
Receives the check from the general manager and records
it in the check disbursement voucher and voucher
register. After preparing the voucher, she gives the
documents to the general manager.
Clerk
Receives the charge invoice and delivery receipt from
the operations manager as reference for when the
customer pays their balance.
Receives the payment from the customer.
Issues two (2) copies of the official receipt, one for the
customer and the other one will be sent to the
bookkeeper for filing.
Deposits the cash to the bank and sends the deposit
slip to the bookkeeper.
Clerk
General Disbursement Transaction
Receives the bill for the utility expenses.
Forwards the bill to the general manager to request a
check.
Receives the check issued by the general manager.
Records the check in the check disbursement voucher
and voucher register.
Responsible in paying the utilities.
Receives the official receipt and forwards it to the general
manager together with the check disbursement voucher
and voucher register for checking if there are any
discrepancies.
Clerk
Payroll Transaction
Updates the payroll register and the daily time report.
The DTR will then be sent to the bookkeeper for
filing.
Prepares the payroll slip for each employee based on
the number of hours worked and any deductions.
Forwards the payroll register and payroll slip to the
operations manager for approval.
Clerk
A. Establishment
Receives the check from the general manager
Deposits the check and convert the funds into cash.
Stores the petty cash fund in a petty cash box for
safekeeping.
Clerk
B. Replenishment
Authorizes and approves petty cash voucher.
Releases cash to the requesting employee.
Receives the official receipt from the employee.
Updates the balance of the petty cash fund.
If the petty cash balance is less than the
replenishment point in the amount of 2,500, she has
to request the general manager to issue a check for the
replenishment of the fund.
Clerk
B. Replenishment
Sends the official receipts and petty cash vouchers to
the general manager as a basis to replenish the fund.
Receives the check from the general manager.
Deposits and converts the funds into cash.
Stores the cash to the petty cash box.
Bookkeeper
Receives, checks and verifies various source
documents (purchase invoice, purchase order, sales
order, check disbursement voucher, voucher register,
sales order, and charge invoice).
Receives, checks, and verifies various reports
(inventory report and receiving report).
Posts the transactions in the appropriate journals,
then to the ledger.
Bookkeeper
Receives the documents (official receipt, and deposit
slip).
Posts the transactions with the appropriate journal
entries in the journal, then to the ledger.
Bookkeeper
General Disbursement Transaction
Compares the check disbursement voucher and
voucher register prepared by the clerk with the official
receipt for the payment of utilities.
If there are any discrepancies in the source documents
(official receipt, check disbursement voucher, and
voucher register), it will be sent back to the clerk for
modifications.
If the documents match, the bookkeeper will then
prepare necessary journal entries and posts it in the
general ledger.
Bookkeeper
Payroll Transaction
Receives and verifies the various source documents
(payroll register, daily time report, payroll slip, check
disbursement voucher, and voucher register).
Posts them in the appropriate journals, then to the
ledger.
Bookkeeper
A. Establishment
Records the check in the check disbursement voucher,
Posts the transactions in the general ledger.
Bookkeeper
B. Replenishment
Receives and file the source documents such as the
official receipt, and petty cash voucher for proper
recording.
Records the expenses and replenishment of the fund.
Posts the transactions in the general ledger.
Bookkeeper
Files the various source documents.

Prepares the trial balance and financial statements.
Accounting
Policies
Accounting Method Used for Recording
Transactions
Nitz Furniture and Piano Center uses the accrual
basis of accounting. Under this method, revenues and
expenses are recognized as follows:
A. Revenue recognition: Revenue is recognized when
both of the following conditions are met:
i. Revenue is earned.
ii. Revenue is realized or realizable.
Revenue is earned when products are delivered or
services are provided. Realized means cash is received.
Realizable means it is reasonable to expect that cash
will be received in the future.
Transactions
ILLUSTRATIVE EXAMPLE:
A client paid Nitz Furniture & Piano Center
50,000 on November 25, 2016 for a 3-piece dining set.
The start of the manufacturing of this furniture will
start on December 1, 2016 and will finish on December
15. They will inspect the finished product on the 16th
and deliver the furniture to the client on the 17th of the
same month.
Transactions
Under the accrual basis, the initial entry to record the
receipt of the case is:
Cash 50,000
Unearned Revenue 50,000
The journal entry to record the issuance of the raw

materials to the fabrication department is:
Work in Process Inventory Fabrication 15,000
Raw Materials Inventory 15,000
Transactions
The entry to record the various costs incurred during the production is:
Manufacturing Overhead Fabrication 4,000
Various Accounts 20,000
The journal entries related to transfers among departments are as follow:

Work in Process Inventory Installation 31,000
Work in Process Inventory Finishing 37,500

Work in Process Inventory Installation 37,500
Transactions
B. Expense recognition: Expense is recognized in the period in
which related revenue is recognized.
Nitz Furniture and Piano Center produces 5 pcs. of
high chairs upon the order of a customer on December 1,
2016. During the start of the manufacturing process, the
business incurred various expenses in the amount of 50,000
in purchasing materials needed for the item ordered. The
business made the payment to the supplier on December 15,
2016. Also, on that day the item was delivered on December
15, 2016 and the payment was made upon delivery.
Transactions
Journal entry to record purchases on Dec. 1, 2016:
Purchases 50,000
Accounts Payable 50,000
Journal entry to record payment of purchases on Dec. 15,

2016:
Accounts Payable 50,000
Cash 50,000
Transactions
ILLUSTRATIVE EXAMPLE (ACCRUAL OF EXPENSES):
For the last week of November 2015, Nitz Furniture and
Piano Center failed to pay the salaries of the production workers
in the amount of 10,000. The salaries were actually paid by the
business during the month of December 2015.
Journal entry to record the recognition of expense incurred on

November 30, 2015:
Salaries Expense 10,000
Salaries Payable 10,000
Journal entry to record payment of expense on December 2015:
Salaries Payable 10,000
Cash 10,000
Cash
Cash comprises the following items:
Cash on Hand
Funds not allocated by a funding agreement for a specific
purpose and is usually the general operating funds of an
organization.
Collections that are awaiting for deposit.
Money kept on hand for making minor disbursements.
Money set aside for the payment of salaries and wages of
employees.
Cash in Bank
The sum of all coins, currency and other unrestricted liquid
funds that have been placed on deposit in the bank which is
unrestricted for withdrawals on expenditures by the business.
Petty Cash
Nitz Furniture and Piano Center uses the imprest fund
system in accounting for petty cash. This is a system of control of
cash which requires that all cash receipts should be deposited
intact and all cash disbursements should be made by means of
check. Under this system, the petty cash fund balance is always
maintained at a fixed amount decided on when the fund is first
established.
A fixed sum is established as a petty cash for a fixed period

to meet the business requirement. Nitz Furniture and Piano
Center will maintain an amount of 5,000 consumable from
Monday-Saturday to pay small expenses not exceeding 500
which cannot be paid conveniently by means of check. The petty
cash fund will be replenished as soon as the disbursement reaches
2,500.
Petty Cash
Nitz Furniture and Piano Center draw a check to
establish the fund. The journal entry is:
Petty Cash Fund 5,000
Cash in Bank 5,000
Payment of expenses out of the fund:

No formal journal entries are made. The cashier
generally requires a signed petty cash voucher for such
payments.
Petty Cash
Replenishment of petty cash payments:
Transportation Expense 500
Telephone 250
Supplies 250
Miscellaneous Expense 1,500
Cash in bank 2,500
Adjustment of unreplenished expenses at the end of the accounting period:
Expenses 1,000
Reversal entry of the adjustment at the beginning of the next accounting
period:
Expenses 1,000
Petty Cash
Why not fluctuating fund system?
A fluctuating fund system is a system in handling petty
cash fund wherein expenditure, voucher/receipt is debited
directly with petty cash fund as credit.
Checks drawn to replenish the fund do not necessarily equal
the petty cash disbursements.
The amount of petty cash in the ledger does not remain
constant.
There is no maintaining balance and the possibility of theft
is increased.
Advances to Employees
The maximum allowable cash advance to employees is
50% of their weekly wages in the amount of 1,050 (2,100 x
50%). The employees are not allowed to obtain another cash
advance until their balance is fully paid. Cash advances are
implemented by the operations manager. These advances are
subtracted from their weekly wages. Workers are not allowed
additional cash advances until their current liability is fully
paid.
Cash advances to employees should be classified as a
receivable of the business. This should be presented under the
current asset since the entity expects to be paid back by the
employee normally in less than a year.
Merchandise Inventory
Inventories are stated at cost and uses the periodic
inventory system. This inventory system only updates the
ending inventory balance in the general ledger when you
conduct a physical inventory count. Under the periodic
inventory system, all purchases made between physical
inventory counts are recorded in a purchases account. When a
physical inventory count is done, the balance in the purchases
account is shifted into the inventory account, which in turn is
adjusted to match the cost of the ending inventory.
The calculation of the cost of goods sold under the periodic
inventory system is:
Inventory, Beginning XXX
Add: Purchases XXX_
Cost of goods available for sale XXX
Less: Inventory, Ending (XXX)
Cost of goods sold XXX_
Under a periodic inventory system, inventory purchases made by a

company are initially stored in a purchases account with the following
journal entry:
Purchases xxx
Accounts payable xxx
The final periodic inventory entry in an accounting period
arises immediately after the physical count of the inventory, when the
accounting staff establishes the actual cost of the inventory on hand
at the end of the month. It then subtracts this actual ending
inventory cost from the cost that has accumulated in the inventory
account, and charges the difference to the cost of goods sold account
with this entry:
Cost of goods sold xxx
Purchases xxx
Inventory xxx
Why not use the perpetual inventory system?
Periodic inventory system is more advantageous compared
to perpetual because it is more practical. Perpetual
Inventory system requires to record the inflow or outflow of
the inventory every time the inventory is being purchased or
being sold. There are several disadvantages in using
perpetual inventory system such as:
Unlike the periodic inventory system, the continuous
inventory system cannot be maintained manually. Therefore,
in order to use the continuous inventory system, a business
must first install specialized equipment and software.
Nitz Furniture and Piano Center has a beginning inventory of
100,000, has paid 170,000 for purchases, and its physical inventory
count reveals an ending inventory cost of 80,000. The calculation of
its cost of goods sold is:
Beginning inventory 100,000
A: Purchases 170,000
Cost of goods available for sale 270,000
L: Ending inventory ( 80,000)
Cost of goods sold 190,000
Journal Entries:
Purchases 170,000
Accounts payable 170,000
#
Cost of goods sold 190,000
Purchases 40,000
Inventory 130,000
#
In valuing their inventory, the entity uses the specific
identification method. This method can be applied in situations
where different purchases can be physically separated. Under this
method, each item sold and each item remaining in the inventory
is identified. The cost of specific items that are sold during a
period is included in the cost of goods sold for that period and the
cost of specific items remaining on hand at the end of a period is
included in the ending inventory of that period.
The specific identification method introduces a high
degree of accuracy to the cost of inventory, since the exact cost at
which something was purchased can be recorded in the inventory
records, and charged to the cost of goods sold when the related
item is sold.
Nitz Furniture and Piano Center elects to use the specific identification
method. They made the following purchases and sales during the month of
December:
Date Units purchased Units sold Balance
Dec. 01 1,000 units @ 500 1,000 units
Dec. 12 3,000 units @ 550 4,000 units
Dec. 17 2,000 units 2,000 units
Dec. 31 1,000 units @ 580 3,000 units
The 3,000 units in the inventory on December 31 is composed of 500 units
from purchases made on December 01, 1,500 units from purchases made on
December 12 and 1,000 units from purchases made on December 31.
Assume that there are no beginning inventory during the month.
The calculation of the ending inventory would be:
Date Units Cost per unit Total cost
Dec. 01 500 500 250,000
Dec. 12 1,500 550 825,000
Dec. 31 1,000_ 580 __ 580,000
Ending inventory _3,000_ 1,655,000
The cost of goods sold is computed below:
Cost of Goods Available for Sale
1,000 units 500 500,000
3,000 units 550 1,650,000
1,000 units 580 580,000 2,730,000
Less: Ending inventory (above) (1,655,000)
Cost of Goods Sold 1,075,000
This method is ideal in situations where a small

number of easily distinguishable items (such as
handicrafts and furniture) are handled.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation.
The initial cost comprises its purchase price and directly
attributable costs of bringing the asset to its working condition and
the location for its intended use. Expenses incurred after it has been
put into operation such as repairs and maintenance are normally
charged to operations in the period when the costs are incurred.
Expenditures have resulted in an increase in the economic benefits
expected to be obtained from the use of an item of property beyond
its originally assessed standard of performance.
Depreciation is computed using the straight-line method over
the estimated useful life.
Why use the straight line method of depreciation?
A. This method is very simple, easy to understand and apply.
B. It facilitates to distribute the full depreciable cost over the
useful life of the asset.
C. Every year, the same amount is charged as depreciation in the
profit and loss account. This makes the comparison of profits for
different years easy.
D. This method is suitable for those assets whose useful life can be
estimated accurately and where the use of the asset is consistent
from year to year.
The useful life and depreciation method are reviewed periodically to
ensure the period and methods of depreciation are consistent with the
expected pattern of economic benefits from items of property and
equipment. The estimated useful life of the property and equipment
are based on the standard given by the Commission on Audit:
Building 20 years
Delivery equipment 10 years
Office furniture & fixtures 10 years
Tools & equipment 10 years
Nitz Furniture and Piano Center acquired new equipment for 10,000
on January 1, 2016. The journal entry to record the acquisition:
Equipment 10,000
Cash/Accounts Payable 10,000
The estimated useful life of the equipment is 10 years. By using the
straight line depreciation method, we compute the annual
depreciation by using the formula:
Cost minus residual value
Annual depreciation = Useful life in years
10,000
= 10 yrs.
= 1,000
The journal entry to record depreciation is:
Depreciation 1,000
Accumulated Depreciation 1,000
Effect in the statement of financial position at the end of the year:
Equipment 10,000
Accumulated Depreciation (1,000)
Carrying Amount 9,000
Current Liabilities
Accounts payable trade represents an obligation

to creditors for merchandise purchased on credit.
Non-current Liabilities
Account payable SB Corp represents a long-

term loan payable for four (4) years at an annual rate of
9% from 2014 to 2018 at an amount of less than one
million (1,000,000). Currently, the carrying amount of
said loan is less than two-hundred thousand (200,000).
Capital
The computation of the capital account of the entity is
computed as follows:
Capital, beginning XXX
Add: Net income, current year XXX_
Total XXX
Less: Personal drawing (XXX)
Capital, ending XXX
End of the Year Accounting Procedures
The bookkeeper prepares the year-end financial
statements.
The bookkeeper is responsible for preparing for the annual
financial audit and for working with the outside accountants to
complete the audit.
The financial statements should be to the general manager
at least one week prior to the end of the year in order to facilitate
the review.
The general manager approves the year-end financial
statements.
The bookkeeper will arrange to move all records from the
year which is closing to storage.
Reporting Period
The entity uses the calendar year in reporting its financial
statements. The advantage of using it is simplicity. For sole
proprietors in particular, tax reporting is often easier when the
business's tax year matches up with that of the business owner.
Accounts Receivable
The accounts receivable of Nitz Furniture and
Piano Center are composed of short-term amounts due
from buyers have ordered furniture on credit. The credit
policies of the entity is enumerated below:
1. The entity applies the credit terms 2/10, n/30 for all
job orders made by their clients.
2. The strict implementation of the 50% down payment
for private individuals (non-public/government entities) is
observed.
3. Orders made by public/government entities are
immediately aged even if it is still not due. This is due to
the uncertainty that the accounts will be immediately
paid.
Accounting for Bad Debts
Business entities sell on credit rather than only for

cash to increase total sales and thereby increase income.
However, an entity that sells on credit assumes the risk
that some customers will not pay their accounts. When
an account becomes uncollectible, the entity has
sustained a bad debt loss. This loss is simply one of the
costs of doing business on credit. Nitz Furniture and
Piano Center uses the balance sheet method, specifically
the aging of accounts receivable in estimating doubtful
accounts.
The journal entry to recognize doubtful accounts is:
Doubtful accounts expense XXX
Allowance for doubtful accounts XXX
If the doubtful accounts are subsequently found to be uncollectible,

the accounts are written off as follows:
Accounts Receivable XXX
Entry if the accounts written off are unexpectedly collected:
Cash XXX
Nitz Furniture and Piano Centers accounts receivable of 40,000 are
considered doubtful of collection.
Doubtful accounts expense 40,000
Allowance for doubtful accounts 40,000
The accounts are subsequently discovered to be uncollectible.

Accounts Receivable 40,000
75% of the same accounts that were previously written off or
30,000 are unexpectedly collected.
Cash 30,000
Aging of Accounts Receivable
Doubtful accounts are recognized when the loss is

probable and the amount can be estimated reliably. The
method of estimating doubtful accounts used is the aging of
accounts receivable. This method involves an analysis where
the accounts are classified into not due or past due.
The table below shows the summary of aging the A/R:
Not due 1%
1-30 days past due 2%
More than one year 50%

The percentages presented above is based on the
experience of the entity when collecting receivables. For
example, they have estimated that since it is harder to collect
receivables when more than one (1) year has already passed,
they deemed it safe to make the percentage of uncollectibility
50%.
The amount computed by aging of accounts receivable

represents the required allowance for doubtful accounts at the
end of the period.
Under this method, the doubtful accounts expense is
computed as follows:
Required allowance XXX
Less: Allowance balance before adjustment (XXX)
Doubtful accounts expense XXX
Nitz Furniture and Piano Center has the following
information with regard to accounts receivable and their
probability of non-collection:
Probability of Non-
Age Category Amount Uncollectible Amount
collection
Not due 64,200 1% 642

1-30 days 11,900 2% 238
31-60 days 5,200 4% 208
61-90 days 7,500 7% 525
91-180 days 50,000 10% 5,000
181-365 days 78,900 30% 23,670
More than one year 50% ____________
Required allowance for doubtful accounts 30,282
The allowance for doubtful accounts has a credit balance of
10,000 before adjustment.
Required allowance 30,282

Less: Allowance balance before adjustment (10,000)
Doubtful accounts expense 20,282

Nitz Furniture &amp; Piano Center

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Nitz Furniture and

Name of the business: Nitz Furniture and Piano Center

Files the various source documents.

The journal entry to record the issuance of the raw

The journal entries related to transfers among departments are as follow:

Work in Process Inventory Finishing 37,500

Journal entry to record payment of purchases on Dec. 15,

Journal entry to record the recognition of expense incurred on

A fixed sum is established as a petty cash for a fixed period

Payment of expenses out of the fund:

Under a periodic inventory system, inventory purchases made by a

This method is ideal in situations where a small

Accounts payable trade represents an obligation

Account payable SB Corp represents a long-

Business entities sell on credit rather than only for

If the doubtful accounts are subsequently found to be uncollectible,

The accounts are subsequently discovered to be uncollectible.

Doubtful accounts are recognized when the loss is

1-30 days past due 2%

31-60 days past due 4%

61-90 days past due 7%

91-180 days past due 10%

181-365 days past due 30%

More than one year 50%

The amount computed by aging of accounts receivable

Not due 64,200 1% 642

Required allowance 30,282

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