The chief accountant for Wildhorse Corporation provides you with the following list of accounts receivable written...
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The chief accountant for Wildhorse Corporation provides you with the following list of accounts receivable written off in the current year. Date Customer Amount March 31 E. L. Masters Company $7,900 June 30 Stephen Crane Associates 7,000 September 30 December 31 Amy Lowell's Dress Shop R. Frost, Inc. 7,300 9,500 Wildhorse follows the policy of debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this procedure is appropriate for financial statement purposes because the Internal Revenue Service will not accept other methods for recognizing bad debts. All of Wildhorse's sales are on a 30-day credit basis. Sales for the current year total $2,200,000. The balance in Accounts Receivable at year-end is $87,100 and an analysis of customer risk and charge-off experience indicates that 12% of receivables will be uncollectible (assume a zero balance in the allowance). (b) By what amount would income before taxes differ if bad debt expense was computed using the percentage-of-receivables approach? Net income would be $ under the percentage-of-receivables approach. The chief accountant for Wildhorse Corporation provides you with the following list of accounts receivable written off in the current year. Date Customer Amount March 31 E. L. Masters Company $7,900 June 30 Stephen Crane Associates 7,000 September 30 December 31 Amy Lowell's Dress Shop R. Frost, Inc. 7,300 9,500 Wildhorse follows the policy of debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this procedure is appropriate for financial statement purposes because the Internal Revenue Service will not accept other methods for recognizing bad debts. All of Wildhorse's sales are on a 30-day credit basis. Sales for the current year total $2,200,000. The balance in Accounts Receivable at year-end is $87,100 and an analysis of customer risk and charge-off experience indicates that 12% of receivables will be uncollectible (assume a zero balance in the allowance). (b) By what amount would income before taxes differ if bad debt expense was computed using the percentage-of-receivables approach? Net income would be $ under the percentage-of-receivables approach.
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1 Calculate Bad Debt Expense using PercentageofReceivables Approach Given Sales for the current year ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
Posted Date:
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