PowerPoint Presentation Throughout the project, you have been asked a number of questions relating to the Balance Sheet of ABC Company. Using the Balance S

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Throughout the project, you have been asked a number of questions relating to the Balance Sheet of ABC Company. Using the Balance Sheet found below, perform a horizontal analysis. Once complete, use your new version of the Balance Sheet to present and discuss the Balance Sheet of ABC Company using voice-over PowerPoint.

Based on the inferences you make from your horizontal analysis, discuss any improvements and/or changes that may have occurred since the prior year. Consider addressing the items that the Board of Directors requested information on throughout the project: (1) Accounts Receivables and the process for uncollectible accounts; (2) Payroll Liabilities as well as other Current or Long-Term liabilities; and (3) the types of investments held by ABC Company. Keep in mind the intended audience of your presentation.

Everything you need to create the PW Presentation is attached. Thank you.



The Board of Directors


Rachel Suarez Guerra


February 13, 2022



Once bad debts are determined to be unrecoverable, the direct write-off approach, which is required for federal tax purposes, recognizes them as an expenditure. The allowances accurate numbers for uncollectible in advance, analogous to placing money in a reserve account. We decide that a purchaser will now no longer pay if we appoint the direct write-off approach. Under the direct write-off technique, we do now no longer document any estimations or observe the Allowance for Doubtful Accounts. For the quantity we decide will now no longer be paid, we report Bad Debt Expense. This approach departs from the GAAP requirement that sales and charges be suggested withinside the equal quarter. (2).

Allowance Method:

After every monetary year, an estimate of the quantity of awful debt is made. It is aggregated into provisions that are allocated to specific receivables as needed. An allowances approach is to set money aside for bad debts that are likely to eventuate. The reserves are calculated as a percentage of revenue made during a period ending, with the hazard related to specific clients considered.

The amount the firm anticipates recovering from accounts receivable is known as net realizable value. The corporation does not know which individual accounts will become uncollectible when it makes the bad debts adjustment entry. (1).


When it is decided that the debt will not be recovered, the straight write-off technique permits a company to write off the obligation. The straight write-off approach results in an instant write-off of debt expenditure and a decrease in AR. The allowance technique entails a company putting a proportion of every dollar of sales into a reserve account that may be used to claim future bed debt charges. As a result, once a company makes a transaction, it quickly recognizes bad debt.

Since it simplest takes one document to debit terrible debt rate and credit score receivable. The direct write-off procedure is a quicker way of handling bad debt. Because it entails the setup of provisions accounts, the allowances strategy is more complicated.

Whenever a small business feels that an invoice is uncollectible, it can use the direct write-off method to debit the bad debt account and credit the receivables. That helps clear the income record and any outstanding debts owed to the firm.

A company will almost always prefer the allowance technique over the straight write-off method since it allows them to forecast future bad debt expenditures rather than being blindsided by an uncollectible account. That aids the organization in reducing the danger of overestimating income for a certain time.

Timing, correctness, and the amount shown on the balance sheet are the main differences between the two. That is because direct write-off delays recognition until it is known that the receivable is bad, while the allowance begins at the point of sale.

The direct write-off method’s accuracy is higher because it is against actual invoices, whereas allowance is an estimated amount, and because the allowance method reserves against the AR on the balance sheet, it tends to lower AR reported.


1. Allowance method for uncollectible. (n.d). Principles of Accounting.

2. Thomas, W. Tietz, W. Harrison, W. Horngren, C. (2018, January 3). Financial accounting (12th Edition). Pearson Education.

3. Wild, J. & Shaw, K (2021). Principles of Financial Accounting 25th ed plus Connect.*New York, NY:Mc-Graw Hill.

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