Effect of doubtful accounts on net income During its first year of operations, Mack's Plumbing Supply Co. had sales of $450,000, wrote off $7,200 of accounts as uncollectible using the direct write-off method, and reported net income of $49,500. Determine what the net income would have been if the allowance method had been used and the company estimated that 2% of sales would be uncollectible. 9,000 X Feedback Check My Work Under the direct write-off method, Bad Debt Expense is recorded when the customer's account is determined to be worthless and written off. There i is no adjusting entry at year-end to record estimated bad debt. To compute net income using the allowance method, first compute net income before write-off of accounts associated with the bad debt expense. Then determine how an amount estimated for Bad Debt Expense based on a percent of sales, would affect that net income.

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Effect of Doubtful Accounts on Net Income) During its first year of operations, Fisher Plumbing Supply Co. had sales of $590,000, wrote off $9,400 of accounts as uncollectible using the direct write-off method, and reported net income of $64,900. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1 1/4% of sales would be uncollectible. 72,275 X

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Estimating Doubtful Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Age Class Balance   Percent Uncollectible Not past due    $532,000   1/2 % 1–30 days past due 58,500   4   31-60 days past due 26,600 6   61–90 days past due 19,200 14   91–180 days past due 13,800 41   Over 180 days past due 10,100 80     $660,200       Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31. Age Class Balance PercentUncollectible Estimated UncollectibleAccounts Amount Not past due $532,000 1/2% $fill in the blank 1     1-30 days past due 58,500 4 fill in the blank 2     31-60 days past due 26,600 6 fill in the blank 3     61-90 days past due 19,200 14 fill in the blank 4     91-180 days past due 13,800 41 fill in the blank 5     Over 180…

View Policies Current Attempt in Progress Vaughn Manufacturing has outstanding accounts receivable totaling $ 6.47 million as of December 31 and sales on credit during the year of $ 24.5 million. There is also a credit balance of $ 11500 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? O $388200. O $ 399700. O $ 376700. O $1470000. Save for Later Attempts: 0 of 1 used Submit Answer

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ment/chec Show Me How Print Item Estimating Doubtful Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31, and a historical añalysis of the percentage of uncollectible accounts in each age category are as follows: Percent Age Class Balance Uncollectible Not past due $782,000 1/2 % 1-30 days past due 86,000 4 31-60 days past due 39,100 7 61-90 days past due 28,200 18 91-180 days past due 20,300 41 Over 180 days past due 14,900 80 $970,500 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31. Percent Estimated Uncollectible Age Class Balance Uncollectible Accounts Amount Not past due $782,000 1/2% 1-30 days past due 86,000 4 31-60 days past due 39,100 7

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