Documentation Case
Introduction:
Following are Flowcharts and notes about process memos of SprintyPrints company. They are Bonus accrual process, depreciation process, bad debt expense/allowance account estimation process and interest payable processs.
Bad Debt Expense / Allowance Account Estimation:
When running this download it is important to specify the system date as the last day in the month (e.g. 1/31/2010) and the range as the first day to the last day of the month (e.g. 1/1/2010 – 1/31/2010). The balance sheet accounts are as of the “system date” whereas the income statement accounts reflect the transactions occurring during the range specified.
Another download (GL290_Custom_Aging_AR) is pulled, and the resulting text file is converted to Microsoft excel format (using text-to-columns) and pasted into cell A1 in the “aging” tab of the workbook.
The aging report total is agreed to the balance in the AR control account 10100 (after this is done, initials are recorded in the appropriate cell of the “controls and maintenance” tab of the workbook) and significant differences are investigated (immaterial–anything under $1000–differences are ignored). Adjustments are made using a journal entry if necessary.
The aging report is then pasted into the “calc” tab of the workbook (cell A7 data dump) and rid of any AR balances in the “disputes” tab because disputed AR balances receive separate consideration in the allowance calculation.
An adjustment to the reserve account is made each month based on the economic index update. The economic index is recorded in the “calc” tab and is calculated as the change in value of the Nasdaq composite index (Ticker IXIC) from the prior month to the current month.
The estimate is also influenced by SprintyPrint’s collection experience for each aging