CourseLover

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About CourseLover

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Teaching Since: May 2017
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  • MCS,MBA(IT), Pursuing PHD
    Devry University
    Sep-2004 - Aug-2010

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  • Assistant Financial Analyst
    NatSteel Holdings Pte Ltd
    Aug-2007 - Jul-2017

Category > Business & Finance Posted 08 Dec 2017 My Price 10.00

Effect of Doubtful Accounts on Net Income

Effect of Doubtful Accounts on Net Income

During its first year of operations, Mack's Plumbing Supply Co. had sales of $300,000, wrote off $5,000 of accounts as uncollectible using the direct write-off method, and reported net income of $33,000.

Assume that during the second year of operations Mack's Plumbing Supply Co. had sales of $360,000, wrote off $6,000 of accounts as uncollectible using the direct write-off method, and reported net income of $36,000.

a.  Determine what net income would have been in the second year if the allowance method (using 1-1/4% of 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. If required, use the minus sign to indicate a "debit" balance.
$

Answers

CourseLover
(12)
Status NEW Posted 08 Dec 2017 01:12 PM My Price 10.00

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