Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
1. Leni Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2019, Leni decides to increase
1. Leni Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2019, Leni decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been P380,000 instead of P285,000. In 2019, bad debts expense will be P120,000 instead of P 90,000.
Required:
- What amount of bad debts should the company report in its statement of comprehensive income as a result of change in estimate?
- Assuming that Accounts receivable at the end of 2019 has a balance of P600,000, how much is the net realizable value after considering the change in estimate
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started