E1.1o (LO3) (Bad-Debt Reforting The Chief accountant for Dickinson Corporation Provides You with the following ist of accounts receiv. written otf in the Current Year (ustomer E.L. Masters Company stephen Crane AsSOciates Amy Lowell's Dress Shop R.Frost Inc Amount $7,800 6,700 Date March 31 June30 September 30 yooD 9830 December 31 Dickinson follows the Policy of debiting Bad Debt EXPense as accounts are written offi The Chief accountant maintains that this Procedure is appropriate for tinancial Statement PurPoses becquse the Internal Revenue service will not gccept other methods for recognizing bad debts. All of Dickinson's sales are on a 30-day (redit basis. Sales for the Current year total $320g000. The bulance in Accounts Receiv. at Year-end is $7,00 and an analysis of Customer risk and Charge-off experience indicates that 12% of receivables will be uncollectible (assume a zero balance in the allowance). Instructions: Do You agree or disagree with Dickinson's Policy Concerning recognition of bud debt exeense? Why or Why not? BY What amount would net income differ if bad debt expense was Computed using the Percentage-of-receivalbles geeroach? B.

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