Chip Company is making estimates of bad debts and warranties at year end, December 31, 2009. The

Question:

Chip Company is making estimates of bad debts and warranties at year end, December 31, 2009. The firm believes that it will have declining revenue in 2010, so the accounting manager suggests the firm record $50,000 for bad debts expense this year, even though the aging schedule indicates that only $30,000 needs to be recorded. Explain how doing that could help net income in 2010.

Aging Schedule
Aging schedule is an accounting table that shows a company’s account receivables. It is an summarized presentation of accounts receivable into a separate time brackets that the rank received based upon the days due or the days past due. Generally...