Question
Marigold Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2020,
Marigold Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2020, Marigold decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $437,500 instead of $328,125. In 2020, bad debt expense will be $123,200 instead of $92,400. If Marigolds tax rate is 30%, what amount should it report as the cumulative effect of changing the estimated bad debt rate? (Do not leave any answer field blank. Enter 0 for amounts.)
The cumulative effect of changing the estimated bad debt rate | $enter the cumulative effect of changing the estimated bad debt rate in dollars |
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