In reviewing its provision for uncollectible accounts during 20x3, Mason Company determined that 1% of credit sales is an appropriate amount of bad debt expense to be charged to operations. The company had used ½ of 1% as its rate in 20x2 and 20x1 when the expense had been $9,000 and $6,000, respectively. For 20x3, bad debt expense on December 31, 20x3 under the old rate is $3,000 less than it would be under the new rate.. Bad Debt Expense using the old rate has already been recorded. Net income for 20x3 had been determined to be $250,000 using the old rate for calculating bad debt expense. What will be the corrected amount of net income for the year?

In reviewing its provision for uncollectible accounts during 20x3, Mason Company determined that 1% of credit sales is an appropriate amount of bad debt expense to be charged to operations. The company had used ½ of 1% as its rate in 20x2 and 20x1 when the expense had been $9,000 and $6,000, respectively. For 20x3, bad debt expense on December 31, 20x3 under the old rate is $3,000 less than it would be under the new rate.. Bad Debt Expense using the old rate has already been recorded. Net income for 20x3 had been determined to be $250,000 using the old rate for calculating bad debt expense. What will be the corrected amount of net income for the year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company reports a year end credit sales in the amount of 390,000 and accounts receivable of $85,500. The company uses the income statement method to report bad debt estimation. The estimation percentage is 3.5%. There is a current debut balance of $2,000 in the bad debt account and a $2,000 credit balance in the allowance for doubtful accounts. Record the journal entry using the income statement method. Then record this transaction using T accounts
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