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BE4.7 (LO 4) Vandross Company has recorded bad debt expense in the past at a rate of 112% of accounts receivable, based on an aging
BE4.7 (LO 4) Vandross Company has recorded bad debt expense in the past at a rate of 112% of accounts receivable, based on an aging analysis. In 2020, Vandross decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $380,000 instead of $285,000. In 2020, bad debt expense will be $120,000 instead of $90,000. If Vandrosss tax rate is 30%, what amount should it report as the cumulative effect of changing the estimated bad debt rate?
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