During its first year of operations, Mack's Plumbing Supply Co. had sales of $370,000, wrote off $5,900 of accounts as uncollectible using the direct write-off method, and reported net income of $40,700. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1.75% of sales would be uncollectible.
During its first year of operations, Mack's Plumbing Supply Co. had sales of $370,000, wrote off $5,900 of accounts as uncollectible using the direct write-off method, and reported net income of $40,700. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1.75% of sales would be uncollectible.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![During its first year of operations, Mack's Plumbing Supply Co. had sales of
$370,000, wrote off $5,900 of accounts as uncollectible using the direct
write-off method, and reported net income of $40,700.
Determine what the net income would have been if the allowance method
had been used, and the company estimated that 1.75% of sales would be
uncollectible.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa22fd55a-1855-40f3-b82b-dc6152b9c0e2%2F95e2b88f-3f9f-4b50-b395-3ee158554639%2F4qm675l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:During its first year of operations, Mack's Plumbing Supply Co. had sales of
$370,000, wrote off $5,900 of accounts as uncollectible using the direct
write-off method, and reported net income of $40,700.
Determine what the net income would have been if the allowance method
had been used, and the company estimated that 1.75% of sales would be
uncollectible.
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