During its first year of operations, Peter'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.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...
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During its first year of operations, Peter'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.
Transcribed Image Text:During its first year of operations, Peter'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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