**Effect of Doubtful Accounts on Net Income**During its first year of operations, Mack’s Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of sales would be uncollectible._\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**Feedback****Check My Work**Under the direct write-off method, Bad Debt Expense is recorded when the customer's account is determined to be worthless and written off. There is no adjusting entry at year-end to record estimated bad debt.To compute net income using the allowance method, first compute net income before write-off of accounts associated with the bad debt expense. Then determine how an amount estimated for Bad Debt Expense, based on a percent of sales, would affect that net income.[Learning Objective 5](#)**Navigation Buttons:**- Previous- Next- Check My Work

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Description: **Effect of Doubtful Accounts on Net Income**During its first year of operations, Mack’s Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,5

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During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of sales would be uncollectible.

During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of sales would be uncollectible.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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