Pineapple Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2021, Pineapple decides to increase the estimate to 2%. If the new rate has been used in prior years, cumulative bad debts expense would have been P380,000 instead of P285,000. In 2021, bad debts expense will be P120,000 instead of P90,000. What amount of bad debts should the company report in its statement of comprehensive income as a result of a change in the estimate? a) P120,000 b) P64,600 c) P-0- d) P95,000
Pineapple Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2021, Pineapple decides to increase the estimate to 2%. If the new rate has been used in prior years, cumulative bad debts expense would have been P380,000 instead of P285,000. In 2021, bad debts expense will be P120,000 instead of P90,000. What amount of bad debts should the company report in its statement of comprehensive income as a result of a change in the estimate? a) P120,000 b) P64,600 c) P-0- d) P95,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pineapple Company has recorded
What amount of bad debts should the company report in its statement of comprehensive income as a
result of a change in the estimate?
a) P120,000
b) P64,600
c) P-0-
d) P95,000
Please explain how you arrived with your answer. Thank you!
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