First, the retained earnings increased by 85.35% compared from prior year. This will affect to increase in cash and accounts receivable which have 47.15% and 43.59% respectively. Additionally, since we have increase in Accounts Receivable, there might be an increase in uncollectible accounts which the reason doubtful allowance increases by 72.41%. A proper policy and terms for the customer should be strictly monitored by the Treasurer to avoid an increase in uncollected accounts. Second, since we have more Sales during the year, an overtime for employees or a possible additional benefit is the reason there is an increase with Salaries Payable and other Taxes Payables. Long-term Payable may also be a result of additional investment, especially for PPE. Third, Investment for PPE increased by 35.28% which is needed to increase the production and Sales. Other Investment such as Trading securities and Available-for-sale securities also increased. On the other hand, Inventories decrease due to high demand of Sales. A proper control monitoring should properly address to have enough stocks and avoid delay due to it. Also, the Treasurer should also handle properly the proper timing of payment of current assets such as Notes Payable which have no movement since prior year. To: Board of DirectorsFrom: Rachel Suarez GuerraDate: Feb 27, 2022Subject: Investment Strategies Following your request to explore the company's financial state, I have researched the requested areas and would like to share my findings with you. I hope that the information I will share with you will provide the clarity needed for the company's growth. Below, I have covered the various parts revolving around the company's financial state.  Debt versus equity securities      These are the two security types that are significant factors to consider when accounting for an investment. Debt securities entail the borrower repaying the principal the initial principal, while equity entails ownership of the company's net assets. However, a very recent finding shows that managers do not reduce the risk of equity investment portfolios (Kim et al., 2022). An example of debt security is a bond, while stock is equity security. When buying a bond in a company, they are repaid both the principal and the interest accrued. However, when it comes to stocks, if an individual buys stocks in a particular company, they buy a piece of the specific company. Therefore, the investors profit in the case of profits, and the same applies to losses.  Various types of investments      Classes of debt securities are held to maturity, trading, and available for scale, while those of equity include insignificant influence, major influence, and controlling influence. Additional examples of debt securities include corporate bonds, municipal bonds, government bonds, and collateralized bonds. In contrast, more examples of equity securities would include common preference shares, warrants, convertible bonds, and ...

1. First, the retained earnings increased by 85.35% compared from
prior year. This will affect to increase in cash and accounts
receivable which have 47.15% and 43.59% respectively.
Additionally, since we have increase in Accounts Receivable,
there might be an increase in uncollectible accounts which the
reason doubtful allowance increases by 72.41%. A proper policy
and terms for the customer should be strictly monitored by the
Treasurer to avoid an increase in uncollected accounts.
Second, since we have more Sales during the year, an overtime
for employees or a possible additional benefit is the reason
there is an increase with Salaries Payable and other Taxes
Payables. Long-term Payable may also be a result of additional
investment, especially for PPE.
Third, Investment for PPE increased by 35.28% which is needed
to increase the production and Sales. Other Investment such as
Trading securities and Available-for-sale securities also
increased.
On the other hand, Inventories decrease due to high demand of
Sales. A proper control monitoring should properly address to
have enough stocks and avoid delay due to it. Also, the
Treasurer should also handle properly the proper timing of
payment of current assets such as Notes Payable which have no
movement since prior year.
To:
Board of DirectorsFrom:
Rachel Suarez GuerraDate:
Feb 27, 2022Subject:

2. Investment Strategies
Following your request to explore the company's financial
state, I have researched the requested areas and would like to
share my findings with you. I hope that the information I will
share with you will provide the clarity needed for the company's
growth. Below, I have covered the various parts revolving
around the company's financial state.
Debt versus equity securities
These are the two security types that are significant factors
to consider when accounting for an investment. Debt securities
entail the borrower repaying the principal the initial principal,
while equity entails ownership of the company's net assets.
However, a very recent finding shows that managers do not
reduce the risk of equity investment portfolios (Kim et al.,
2022). An example of debt security is a bond, while stock is
equity security. When buying a bond in a company, they are
repaid both the principal and the interest accrued. However,
when it comes to stocks, if an individual buys stocks in a
particular company, they buy a piece of the specific company.
Therefore, the investors profit in the case of profits, and the
same applies to losses.
Various types of investments
Classes of debt securities are held to maturity, trading, and
available for scale, while those of equity include insignificant
influence, major influence, and controlling influence.
Additional examples of debt securities include corporate bonds,
municipal bonds, government bonds, and collateralized bonds.
In contrast, more examples of equity securities would include
common preference shares, warrants, convertible bonds, and
depository receipts. An extensive look at the types of equity
security is that the preference shares are mostly chosen by many
people over the common shares while claiming company
earnings. Preference shares can either be progressive or non-
progressive and either engaging or non-engaging. In contrast, in
common shares, the investors are required to participate in the

3. decision-making and operations of the organization.
How to account for investments
Accounting for investments in securities is categorized
under short (current liabilities) and long term. Under current
liabilities investments -held to maturity are reported to be
costly, with no discount or surcharge remuneration, debt
investments trading category is a fair value possessing equitable
market value to earnings as well as debt investments under
available for sale and stock investments-insignificant influence
only differing on adjustment to equity and accustoming to
earnings respectfully.
On interminable long-term investment in debt securities,
investments held to maturity (HTM) are accounted at cost with
reduction or surcharge amortized; liability investments
available for sale are equitable value accustoming to equity like
stock investments (with fair value adjustment to income).
Equity method investment-major influence is reported as an
equity method with no equitable value adjustment like
consolidated investments -controlling influence under the
integrated procedure.
To sum it up, it is vital to keep track of its financial
condition. This tracking can be done in diverse ways, such as
analyzing the consequences of managerial decisions, which can
be done through a tool for prospective analysis of companies'
financial statements (Osadchy et al.,2018). Others include
recovering outstanding debt and reducing or rearranging
company expenses, seeking advice from professionals and more
experienced financial experts who would also help.
Nonetheless, constant education in this area is needed.
Employees in the finance department would require this training
to keep up with constant growth.
References:
· Wild, J. & Shaw, K (2021). Principles of Financial Accounting
25th ed plus Connect. *New York, NY: Mc-Graw Hill.
· Scott, G. (2020). Debt security. Investopedia.

4. https://www.investopedia.com/terms/d/debtsecurity.asp
· Kim, S., Kim, S., Marquardt, C. A., & Shin, D. (2022).
Managerial and Investor Responses to Changes in Fair Value
Accounting for Equity Securities. Available at SSRN 4030099.
· Osadchy, E. A., Akhmetshin, E. M., Amirova, E. F.,
Bochkareva, T. N., Gazizyanova, Y., & Yumashev, A. V.
(2018). Financial statements of a company as an information
base for decision-making in a transforming economy.
InformationInformation:ABC CompanyNumber of
Employees:7Pay Period:March 25 - 31,20X1Employee
NameHours workedHourly rateJohn Doe40$15.00Jane
Jones40$15.00Jessie Smith40$17.00Erik Ackers25$17.00Nan
Schmit30$18.00Larry Johnson35$20.00Christopher
Hay40$25.00Key Assumptions:Assume Federal Income Tax will
be withheld at a rate of 20% for everyone.FICA Social Security
rate is 6.2% and Medicare is 1.45%.When you called your State,
they told you that your State Unemployment tax rate would be
5.4%.Recall that the Federal Unemployment rate is the same for
all businesses, 0.6%.Assume that no employee has reached the
wage limits for FUTA, SUTA or Social Security.Required:1.
Complete the Payroll Report worksheet2. Use the Transactions
worksheet to complete your Journal worksheet
Payroll ReportRequired: Complete the payroll report below
using the information provided on the Information tab.March
Payroll - 03/25-03/31Employee NameHours workedHourly
rateGross PayFederal WithholdingSocial
SecurityMedicareNetJohn Doe40$15.00$ 600.00$ 120.00$
37.20$ 8.70$ 434.10Jane Jones40$15.00$ 600.00$ 120.00$
37.20$ 8.70$ 434.10Jessie Smith40$17.00$ 680.00$
136.00$ 42.16$ 9.86$ 491.98Erik Ackers25$17.00$
425.00$ 85.00$ 26.35$ 6.16$ 307.49Nan Schmit30$18.00$
540.00$ 108.00$ 33.48$ 7.83$ 390.69Larry
Johnson35$20.00$ 700.00$ 140.00$ 43.40$ 10.15$
506.45Christopher Hay40$25.00$ 1,000.00$ 200.00$ 62.00$

5. 14.50$ 723.50Totals$ 4,545.00$ 909.00$ 281.79$ 65.90$
3,288.31
TransactionsRequired: Use the transactions below to complete
your Journal on the next worksheet.Tip: Refer to pages 402-404
of your text for examples.TransactionsApril1Record accrued
payroll for March 25 through March 31 using the Payroll
Report2Record employer payroll taxes for the same Payroll
Report (hint - remember to record FUTA and SUTA as
well)7Record payment of cash to employees.
JournalRequired: Enter the journal entries from the transactions
found on the Transaction worksheetJournal EntriesDateAccount
TitleDebitCreditMarch, 31Salaries Payable4,545.00Federal
Income Tax Withholding Payable909.00Social Security Tax
Payable281.79Medicare Tax Payable65.90March, 31Payroll Tax
Expense620.39Social Security Tax Payable281.79Medicare Tax
Payable65.90FUTA Tax Payable @0.60%27.27SUTA Taxes
Payable @5.4%245.43March, 31Salaries
Payable3,288.31Cash3,288.318,453.705,165.39
To:
The Board of DirectorsFrom:
Rachel Suarez GuerraDate:
February 13, 2022Subject:
ACCOUNTING
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:

6. 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).
Decision:
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

7. 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.
References
1. Allowance method for uncollectible. (n.d). Principles of
Accounting. https://www.principlesofaccounting.com/chapter -
7/approaches-for-uncollectibles/
2. Thomas, W. Tietz, W. Harrison, W. Horngren, C. (2018,
January 3). Financial accounting (12th Edition). Pearson
Education. https://textbooks.cx/product/financial-accounting-
12th-edition-ebook-2/
3. Wild, J. & Shaw, K (2021). Principles of Financial
Accounting 25th ed plus Connect.*New York, NY:Mc-Graw
Hill.