For each issue write a note for the audit file (3-5 sentences) identify the type of accounting change or error, the appropriate accounting treatment, include amounts where applicable and how net income would be impacted if the issue needs correcting. a) In early 2019, Honey Crunch changed its estimate from 5% to 4% of receivables on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 4% rate had been used, would have been $8,000. The company adjusted Net Income in 2018 to reflect the change.
For each issue write a note for the audit file (3-5 sentences) identify the type of accounting change or error, the appropriate accounting treatment, include amounts where applicable and how net income would be impacted if the issue needs correcting. a) In early 2019, Honey Crunch changed its estimate from 5% to 4% of receivables on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 4% rate had been used, would have been $8,000. The company adjusted Net Income in 2018 to reflect the change.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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For each issue write a note for the audit file (3-5 sentences) identify the type of accounting change or error, the appropriate accounting treatment, include amounts where applicable and how net income would be impacted if the issue needs correcting.
a) In early 2019, Honey Crunch changed its estimate from 5% to 4% of receivables on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 4% rate had been used, would have been $8,000. The company adjusted Net Income in 2018 to reflect the change.
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