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Online teach × C Chegg Study Order Confimax + cengagenow.com/ilrn/takeAssignment/takeAssignmentMandoinvokers sa ?.aSearch 90% eBook Print tem Effect of Doubtful Accounts on Net Income During its first year of operations, Master Plumbing Supply Co. had sales of $220,000, wrote off $3,500 of accounts as uncollectible using the direct write-off method, and reported net income of $24,200 Determine what the net income would have been if the allowance method had been used, and the company estimated that 1 1/4% of sa would be uncollectible.

Explanation / Answer

Ans)

Expense under direct write off: 3500

Expense under Allowance: 220,000 X 1.25% = 2750

which means expense is over stated by 750

so, the net income under allowance would be 24,200 + 750 = 24,950

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