Bad Debt Expense Assignment | Top Universities
The chief accountant for Pharoah Corporation provides you with the following list of accounts receivable written off in the current year. Date Customer Amount March 31 June 30 September 30 December 31 E. L. Masters Company Stephen Crane Associates Amy Lowell's Dress Shop R. Frost, Inc. $7,160 8,810 6,890 8,350 Pharoah follows the policy of debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this procedure is appropriate for financial statement purposes because the Internal Revenue Service will not accept other methods for recognizing bad debt All of Pharoah's sales are on a 30-day credit basis. Sales for the current year total of $2,263,700.
The balance in Accounts Receivable at year-end $73,000 and analysis of customer risk and charge-off experience indicates that 10% of receivables will be uncollectible (assume a zero balance in the allowance). (b) By what amount would net income differ if bad debt expense was computed using the percentage-of-receivables approach? Assume that accounts written off were for sales in the prior year. Net income would be $ receivables approach. under the percentage-of- LINK TO TEXT Question Attempts: 0 of 3 used. Get Accounting homework help today
