Using the data in Exercise 8-15, assume that during the second year of operations Mack’s Plumbing Supply Co. had net sales of $4,100,000, wrote off $34,000 of accounts as uncollectible using the direct write-off method, and reported net income of $600,000.In Exercise 8-15, During its first year of operations, Mack’s Plumbing Supply Co. had net sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of net sales would be uncollectible.a. Determine what net income would have been in the second year if the allowance method (using 1% of net sales) had been used in both the first and second years.b. Determine what the balance of the allowance for doubtful accounts would have been at the end of the second year if the allowance method had been used in both the first and second years.View Solution: Using the data in Exercise 8 15 assume that during the
Using the data in Exercise 8-15, assume that during the second year of operations Mack’s Plumbing Supply Co. had net sales of $4,100,000, wrote off $34,000 of accounts as uncollectible using the direct write-off method, and reported net income of $600,000.In Exercise 8-15, During its first year of operations, Mack’s Plumbing Supply Co. had net sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1% of net sales would be uncollectible.a. Determine what net income would have been in the second year if the allowance method (using 1% of net sales) had been used in both the first and second years.b. Determine what the balance of the allowance for doubtful accounts would have been at the end of the second year if the allowance method had been used in both the first and second years.View Solution:
Using the data in Exercise 8 15 assume that during the
In case allowance for doubtful accounts is created using estimated figures, the company debits the bad debt expenses and credits the allowance for doubtful debts. The actual bad debt expenses are written off from the bad debt allowance account.
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