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Initsfirstyearofbusiness,MarimanCompanyhasnetincomeof$290,000,exclusiveofanyadjustmentforbaddebts expense.Thepresidentofthecompanyhasaskedyoutocalculatenetincomeundereachoftwoalternativesof accountingforbaddebts:thedirectwrite-offmethodandtheallowancemethod.Thepresidentwouldliketousethe methodthatwillresultinthehighernetincome.Sofar,noadjustmentshavebeenmadetowriteoffuncollectible accountsortoestimatebaddebts.Therelevantdataareasfollows: Write-offsofuncollectibleaccountsduringtheyear $21,000 Netcreditsales 750,000 Estimatedpercentageofnetcreditsalesthatwillbeuncollectible 5% REQUIRED: 1.Computenetincomeundereachofthetwoalternatives. 2.DoesMarimanhaveachoiceastowhichmethodtouse?Ifso,shoulditbaseitschoiceonwhichmethodwill resultinthehighernetincome?(Ignoreincometaxes.)Explain

Initsfirstyearofbusiness,MarimanCompanyhasnetincomeof$290,000,exclusiveofanyadjustmentforbaddebts expense.Thepresidentofthecompanyhasaskedyoutocalculatenetincomeundereachoftwoalternativesof accountingforbaddebts:thedirectwrite-offmethodandtheallowancemethod.Thepresidentwouldliketousethe methodthatwillresultinthehighernetincome.Sofar,noadjustmentshavebeenmadetowriteoffuncollectible accountsortoestimatebaddebts.Therelevantdataareasfollows: Write-offsofuncollectibleaccountsduringtheyear $21,000 Netcreditsales 750,000 Estimatedpercentageofnetcreditsalesthatwillbeuncollectible 5% REQUIRED: 1.Computenetincomeundereachofthetwoalternatives. 2.DoesMarimanhaveachoiceastowhichmethodtouse?Ifso,shoulditbaseitschoiceonwhichmethodwill resultinthehighernetincome?(Ignoreincometaxes.)Explain

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