Accounting

Case 1)

Part A) MGA Company

Balance of the provision for uncollectible accounts at the end of the fiscal year.

Accounts Receivable Aging 

Report as of: date on which report is prepared

AGE OF RECEIVABLE

Amount

Chance of recovery

less than16 days

350,000

0.98

Between 16 and 30days

110,000

0.9

Between 31 and 45 days

75,000

0.85

Between 46 and 60 days

41,000

0.8

Between 61 and 75 days

22,000

0.55

Over 75 days

10,000

0

Expected Amount of Accounts Receivable that is Uncollectible

As of August 31, 2011

Age of Accounts Receivables

Accounts Receivable Amount

Probability of Not Collecting

Expected Uncollectible Amount

less than16 days

350,000

0.98

343,000

Between 16 and 30days

110,000

0.9

99,000

Between 31 and 45 days

75,000

0.85

63,750

Between 46 and 60 days

41,000

0.8

32,800

Between 61 and 75 days

22,000

0.55

12,100

Over 75 days

10,000

0

-

Totals

608,000

550,650

This amount $550,650 is balance for the Allowance for bad debts at the end of fiscal year. This amount will be transfer to the Balance Sheet of the fiscal year.

2) Journal entry the provision for Uncollectible Accounts

Journal Entry

Recognition Entry

 

Dr

Cr

Bad Debts Expense

50,000

 

Allowance for Doubtful Accounts

 

50,000

 

 

 

 

Accounts Receivable

690,000

 

Less: Allowance for Doubtful Accounts

50,000

 

Accounts Receivable, net

640,000

 

 

 

 

 

Write-off Entry

 

Dr

Cr

Allowance for Doubtful Debts

550,650

 

Accounts Receivable

 

550,650

Part B)

Encoding

The Purpose of FASB Codification

In 2009, the FASB issued Statement No. 168 "Coding the FASB Accounting Standards ™" (Encryption), which defines the encoding as the authoritative source of GAAP. The rules and recommendations issued by the SEC application sources are authoritative GAAP for those who register with the SEC. They can be events or transactions not processed by the encoding and, if so, you must pay attention to other accounting principles for similar transactions or events, as part of a source of authoritative GAAP for that entity and then turn to a non-guidance authoritative derived from other sources.

As the legislation of the U.S. GAAP differ somewhat from International Financial Reporting Standards (IFRS) and the amounts reported under U.S. GAAP may not be comparable with those of companies using IFRS. The FASB and IASB are working to reconcile these differences, with the goal of continuing to appraise in the future. Codification reorganizes the thousands of existing U.S. GAAP pronouncements into roughly 90 accounting topics and displays it using a coherent structure. It also includes relevant guidance of the Securities and Exchange Commission (SEC), which follows the same topical structure in separate sections within the coding (www.ifrs.org).

The code itself does not change GAAP, but introduces a new structure, which is organized into a system of online research easily accessible, easy to use. 

For instance, U.S Company like Enron who was deregulated by the government. Their financial statements did not show the clear picture of its operation and true financial position to their shareholders and the analyst. However, they hide their losses and their earnings reports were completely skewed up due to which the investments in the Enron were increasing as their statements were showing Enron as a high profitable company. Nevertheless, the company faced a huge loss due to the Misrepresentation, Fraudulent, Embezzlement, Losses and Consequences, in order words, in their accounts they showed wrong revenue recognition, Mark-to-market accounting, Special purpose entities and other accounting issues.

In 2009, the FASB issued Statement ...