Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category Information for outstanding receivable debt for 2019 0-30 days past due 31-90 days Over 90 days past due past due Accounts receivable amount $140,000 $90,000 20% Percent uncollectible 79 $68,000 40% ? 2 ? Total per category Total uncollectible 2 To manage earnings more favorably. Noren Company considers changing the past due categories as follows. 0-60 days past due 61-120 days Over 120 days past due past due $50,500 20% $60,000 40% 7 2 7 Accounts receivable amount $170,000 Percent uncollectible 79 Total per category Total uncollectible A. Complete nach tablet by filling in the blanks 0-30 days 31-90 days past due Over 90 days past due past due $140,000 290 $90,000 20% $68,000 40% Accounts receivable Amount Percent uncollectible Total per category Total uncollectible 0-60 days 61-120 days Over 120 days past due past due past due $170,000 $60,000 Accounts receivable Amount Percent uncollectible Total per category $50,500 20% 7% 40% Total uncollectible 8. Determine the difference between totals uncollectible. C. Complete the following comparative income statements for 2019, showing net Income changes as a result of the changes to the balance sheet aging method categories NOREN COMPANY Comparative Income Statments Year Ended December 31, 2019 Original Categories Categories Change Net Credit Sales $1,260,000 $1,260,000 Cost of Goods Sold 60,000 60,000 Gross Margin $1,200,000 $1,200,000 Expenses: General and Administrative Expense $300,500 $300,500 Bad Debt Expense Total Expenses Net Income (Loss) D. How does the new total uncollectible amount affect net income and net accounts receivable? NOREN COMPANY Comparative Income Statments Year Ended December 31, 2019 Original Categories Categories Change Net Credit Sales $1,260,000 $1,260,000 Cost of Goods Sold 60,000 60,000 Gross Margin $1,200,000 $1,200,000 Expenses: General and Administrative Expense $300,500 $300,500 Bad Debt Expense Total Expenses Net Income (Loss) D. How does the new total uncollectible amount affect net income and net accounts receivable? a. Bad debt expense is lower, net income is higher, and net receivables are higher. b. Bad debt expense is lower, net income is higher, and net receivables are lower. C. Bad debt expense is higher, net income is lower, and net receivables are higher. d. Bad debt expense is higher, net income is lower, and net receivables are lower
