| Course | ACC 326 Managerial Accounting (ACC/326) |
|---|---|
| Week | 3 |
| Paper type | Asset accounting and analysis paper |
| Length | about 1,051 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Accounting |
| Updated | September 2026 |
Free sample paper for ACC 326 Week 3
What a Medical Supply Distributor Really Owns: Cash, Receivables Under an Expected-Loss Allowance, Inventory Under Three Cost Flows and Delivery Trucks Under Two Depreciation Methods
[Student Name]
University of Phoenix
ACC/326: Managerial Accounting
Week 3 Assignment
[Instructor Name]
[Date]
The distributor and all figures are composites written for a model paper; accounting rules and research findings come from the sources listed.
A composite medical supply distributor sells gloves, wound care products, catheters and other disposables to about 700 clinics, nursing homes and home health agencies across three states. It holds inventory in two warehouses and delivers with a fleet of 18 box trucks. At year end, its controller must prepare the asset section of the balance sheet for the owners and for the bank that provides its revolving credit line. Almost every figure in that section rests on a method or an estimate the company chose, and each choice moves reported profit. This paper measures each class of asset and explains the effect of the choices made.
Cash
The operating accounts hold $1.42 million at year end. A further $250,000 sits in a deposit the bank requires as security for a letter of credit given to an overseas glove supplier. That deposit cannot be used for operations, so it is reported separately as restricted cash rather than included in the cash available to pay bills. Reporting it with ordinary cash would make the company's liquidity look better than it is.
Receivables and the Allowance
Customers owe $6.8 million. Not all of it will be collected. Under the current expected-loss standard, the allowance must reflect the credit losses the company anticipates across the remaining life of what customers owe, based on history, current conditions and reasonable forecasts (Financial Accounting Standards Board, 2016). The controller uses an aging schedule. Balances under 30 days, $4.9 million, carry a 1% expected loss; 31 to 60 days, $1.2 million, carry 4%; 61 to 90 days, $450,000, carry 12%; and over 90 days, $250,000, carry 40%. The required allowance is $49,000 plus $48,000 plus $54,000 plus $100,000, or $251,000.
The allowance already holds $96,000 after this year's write-offs, so bad debt expense of $155,000 is recorded. Net receivables are $6,549,000. One nursing home chain under state receivership accounts for most of the over-90-day balance, and the 40% rate reflects its circumstances. McNichols and Wilson (1988) found evidence that managers use this estimate to shape earnings, which is why the controller documents the rates and their basis each year.
Inventory Under Three Cost Flows
Glove prices rose during the year as a key supplier raised prices twice. Nitrile exam gloves illustrate the effect. The distributor began the year with 20,000 cases at $30. It bought 60,000 cases at $33 in the first half and 50,000 cases at $36 in the second, for goods available of 130,000 cases costing $4,380,000. It sold 105,000 cases, leaving 25,000.
Under FIFO, the oldest costs are sold first. Ending inventory is the last 25,000 cases bought, at $36, or $900,000, and cost of goods sold is $3,480,000. Under LIFO, the newest costs are sold first. Ending inventory is the 20,000 opening cases at $30 plus 5,000 at $33, or $765,000, and cost of goods sold is $3,615,000. Under weighted average, the average cost is $4,380,000 divided by 130,000, about $33.69, so ending inventory is about $842,300 and cost of goods sold about $3,537,700.
In each case the two figures add back to $4,380,000. LIFO produces the lowest profit in a year of rising prices, $135,000 below FIFO for gloves alone, and therefore the lowest income tax. It also leaves an inventory balance based on old prices, which understates what the stock would cost to replace. The distributor uses FIFO for its financial statements because its lender compares it with peers that do, and because IFRS, which a potential foreign buyer uses, does not allow LIFO.
Delivery Trucks and Depreciation
The company bought six new box trucks in January for $95,000 each, $570,000 in total, with an expected life of five years and a salvage value of $15,000 each. Straight-line depreciation is $570,000 less $90,000 salvage, divided by five, which gives $96,000 in each of the five years. The declining-balance alternative uses a 40% rate, double the 20% straight-line rate, against the truck's remaining book value, giving $228,000 in year one, $136,800 in year two and $82,080 in year three, stopping when book value reaches salvage.
Trucks lose value and reliability fastest in their first years, so the accelerated method better matches their use. Jackson et al. (2009) found that firms using accelerated depreciation invested more in capital assets, possibly because reported earnings reflected the cost of assets more quickly. For tax purposes the company follows the federal system for depreciating property, which uses its own recovery periods and conventions (Internal Revenue Service, 2025), so book and tax depreciation will differ and create a deferred tax item.
Impairment of the Warehouse System
Three years ago the company capitalized $1.2 million for a warehouse management system, amortized over eight years. A new system purchased this year will replace it within 12 months. The old system's remaining book value is $750,000, but the cash it will still generate before retirement is far less. Because the carrying amount is not recoverable, the company records an impairment loss that reduces the system to its estimated fair value, which the controller puts near zero. Waiting to write it off as it is retired would overstate assets for a year. The loss is reported in operating income, not hidden in cost of goods sold, and the note to the statements explains its cause. Managers sometimes resist impairments because they reduce income in a single year, but a system everyone knows is being replaced cannot honestly be carried at three-quarters of a million dollars.
Effects on Ratios
The choices matter to the lender. The allowance reduces current assets by $251,000; using FIFO rather than LIFO raises inventory; and the impairment reduces total assets and this year's income. Weygandt et al. (2021) note that users should read the notes describing these methods before comparing companies, because two firms with identical operations can report different figures.
Conclusion
The distributor's asset section depends on an expected-loss estimate for receivables, a cost flow method for inventory, a depreciation method for trucks and a judgment about impairment. Each was chosen for a reason, documented and disclosed. The controller's goal is not the highest or lowest figure but one that faithfully represents what the company owns and what it can expect to recover.
References
Financial Accounting Standards Board. (2016). Financial instruments, credit losses (Topic 326): Measurement of credit losses on financial instruments (Accounting Standards Update No. 2016-13).
Internal Revenue Service. (2025). How to depreciate property (Publication 946). https://www.irs.gov/publications/p946
Jackson, S. B., Liu, X., & Cecchini, M. (2009). Economic consequences of firms' depreciation method choice: Evidence from capital investments. Journal of Accounting and Economics, 48(1), 54-68. https://doi.org/10.1016/j.jacceco.2009.06.001
McNichols, M., & Wilson, G. P. (1988). Evidence of earnings management from the provision for bad debts. Journal of Accounting Research, 26, 1-31. https://doi.org/10.2307/2491176
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2021). Accounting principles (14th ed.). Wiley.
What the ACC 326 Week 3 instructions ask
ACC 326 Week 3 usually centers on how assets are measured and reported. Students may be asked to explain the classification of current and noncurrent assets, account for cash and receivables including an allowance for doubtful accounts, compare inventory cost flow methods and calculate depreciation under more than one method. Some prompts add intangible assets, impairment or the effect of these choices on financial statements and ratios. Many sections supply a small data set, while others ask students to explain the concepts using a company they choose. The written part should connect calculations to their meaning for managers and outside users, cite the textbook or standards in APA style and show every figure clearly.
How this ACC 326 Week 3 example is built
A medical supply distributor gives the paper a realistic mix of assets: large receivables from clinics and nursing homes, thousands of inventory items whose prices changed during the year and a fleet of delivery trucks. Each asset class gets its own section with a calculation and a paragraph on what the result means. The allowance for receivables is built from an aging schedule rather than a single percentage, reflecting the expected-loss standard. Inventory is costed three ways from the same purchase records, so the reader can see how method alone changes profit and tax. Depreciation is compared across two methods, and a short impairment test shows when an asset's book value must be written down.
ACC 326 Week 3 grading rubric: where the points go
Faculty tend to grade the assets week on correct calculations and on interpretation. Receivable allowances should follow a stated method and produce a sensible net figure. Inventory cost flows must be applied correctly to the same data, with cost of goods sold and ending inventory reconciling to goods available. Depreciation schedules should use cost, salvage value and useful life consistently. Extra credit often goes to papers that explain effects on net income, taxes and ratios such as the current ratio or inventory turnover, rather than stopping at the numbers. Organization, labeled tables or clear prose figures and APA citations of the textbook and standards complete the rubric, and errors that break reconciliation cost the most marks.
ACC 326 Week 3 help: mistakes to avoid
Students in ACC 326 Week 3 often apply inventory methods to different quantities by mistake, so the three results cannot be compared. Use one set of purchases and one count of units sold for every method, and check that ending inventory plus cost of goods sold equals goods available. Another trap is ignoring salvage value in straight-line depreciation but applying it in declining balance, or the reverse. For receivables, show the aging categories and rates rather than a single guess. Explain what LIFO does to taxes when prices rise and note that IFRS does not permit it. Finally, state which method the company should use and why, since judgment is part of the assignment.
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Other ACC 326 week samples
- ACC 326 Week 1: Managerial Accounting Environment
- ACC 326 Week 2: Cost Concepts and Allocation
- ACC 326 Week 4: Liabilities and Stockholders' Equity
- ACC 326 Week 5: Financial Statement Analysis
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ACC 326 Week 3 questions, answered
What does ACC/326 Week 3 usually cover?
It usually covers short-term and long-term assets: cash, receivables and the allowance for doubtful accounts, inventory cost flows, property and equipment, depreciation methods and sometimes intangibles and impairment.
Where can I find a free ACC 326 Week 3 sample paper?
Read the medical supply distributor example on this page, with its allowance, three inventory methods and two depreciation schedules worked in full and annotated. Send your own figures and a first custom paper costs nothing.
How does LIFO affect taxes when prices rise?
LIFO charges the newest, higher costs to cost of goods sold, which lowers reported income and income taxes, while leaving older, lower costs in ending inventory.
What is the expected-loss model for receivables?
Under current US standards, companies estimate credit losses expected over the life of receivables, using history, current conditions and forecasts, rather than waiting for a loss to become probable.
Why use double-declining balance depreciation?
It records more depreciation in early years, which suits assets that lose value or usefulness quickly, such as delivery trucks, and it lowers taxable income sooner where tax rules allow.
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