A review of the company's provision for uncollectible accounts during 2023 resulted in a determination that 1.5% of sales is the appropriate amount of loss on impairment to be charged to operations, rather than the 2% used for the preceding two years. Loss on impairment recognized in 2022 and 2021 was $33,200 and $15,300, respectively. The company would have recorded $18,000 of loss on impairment under the old rate for 2023. No entry has yet been made in 2023 for loss on impairment

A review of the company's provision for uncollectible accounts during 2023 resulted in a determination that 1.5% of sales is the appropriate amount of loss on impairment to be charged to operations, rather than the 2% used for the preceding two years. Loss on impairment recognized in 2022 and 2021 was $33,200 and $15,300, respectively. The company would have recorded $18,000 of loss on impairment under the old rate for 2023. No entry has yet been made in 2023 for loss on impairment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

2.
A review of the company's provision for uncollectible accounts during 2023 resulted in a determination that 1.5% of sales is
the appropriate amount of loss on impairment to be charged to operations, rather than the 2% used for the preceding two
years. Loss on impairment recognized in 2022 and 2021 was $33,200 and $15,300, respectively. The company would have
recorded $18,000 of loss on impairment under the old rate for 2023. No entry has yet been made in 2023 for loss on
impairment.

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