The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.20% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales $ Revenue 377,000 Bad Debt Expense Other Expenses Net Income $ 383,000 $ 382,000 Unknown Unknown Unknown 331,000 334,000 337,750 Unknown Unknown Unknown

The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.20% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales $ Revenue 377,000 Bad Debt Expense Other Expenses Net Income $ 383,000 $ 382,000 Unknown Unknown Unknown 331,000 334,000 337,750 Unknown Unknown Unknown

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 13EA: Dortmund Stockyard reports $896,000 in credit sales for 2018 and $802,670 in 2019. It has a $675,000...

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Conner Pride reports year-end credit sales in the amount of $567,000 and accounts receivable of $134,000. Conner uses the balance sheet method to report bad debt estimation. The estimation percentage is 4.6%. What is the estimated balance uncollectible using the balance sheet method? A. $26,082 B. $6,164 C. $260,820 D. $61,640
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Dortmund Stockyard reports $896,000 in credit sales for 2018 and $802,670 in 2019. It has a $675,000 accounts receivable balance at the end of 2018, and $682,000 at the end of 2019. Dortmund uses the balance sheet method to record bad debt estimation at 8% during 2018. To manage earnings more favorably, Dortmund changes bad debt estimation to the income statement method at 6% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Dortmund Stockyard in 2019 as a result of its earnings management.
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