Accounts receivable determined to be uncollectible 9,650 The firm's estimated rate for bad debts is 1.15% of credit sales.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Gilmore Electronics had the following data for a recent year:

 

Cash sales $135,000

Credit sales 512,000

Accounts receivable determined to be uncollectible 9,650

The firm's estimated rate for bad debts is 1.15% of credit sales.

 

Conceptual Connection: If Gilmore's estimate of bad debts is correct (1.15% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?

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