Final answer:
The information given is related to financial accounting, focusing on accounts receivable management and the concept of mental accounting. The goal is to understand the changes in accounts receivable and analyze financial decisions that may not be economically optimal.
Step-by-step explanation:
The question provided pertains to the calculation of various financial accounting figures such as the accounts receivable, credit loss expense, and allowance for credit losses. These figures are crucial for understanding a company’s financial health, especially regarding the collection of sales on credit and the management of potential losses due to uncollectible accounts. The information provided indicates transactions and balances over two years, including the amount of credit sales, cash collected, and the receivables written off, which are all typical components of the accounts receivable cycle in business accounting.
To compute the ending balance of accounts receivable and the allowance for credit losses, we need to adjust the beginning balances with the corresponding transactions. Additionally, we need to account for the credit loss expense recognized, which affects the allowance for credit losses. The data can be applied to determine the net realizable value of accounts receivable at the end of each year.
The concept of mental accounting mentioned in the 'Chapter 7' sections provided gives insight into how individuals may irrationally segregate their finances, leading to potentially suboptimal financial decisions, such as the example of carrying a credit card debt with a higher interest expense than the interest income earned on savings.