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%2Fe24c289a-e40c-404c-8eb0-163688afc77b%2Ff7042858-01eb-4cf3-8f62-ca0cbb43d65f%2F0xkqg0o_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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