A company ends Year Three with accounts receivable of $300,000, an allowance for doubtful accounts of $15,000, sales of $900,000, and bad debt…

A company ends Year Three with accounts receivable of $300,000, an allowance for doubtful accounts of

$15,000, sales of $900,000, and bad debt expense of $27,000. In Year Four, sales of $1 million more are made. Cash collections are $800,000, and an additional $13,000 in receivables are written off as uncollectible. The company always estimates that 5 percent of its ending accounts receivable will prove to be bad. On December 31, Year Four, company officials find another $6,000 in receivables that might well be uncollectible. However, after further review, these receivables were not written off at this time. By how much did that decision not to write off these accounts change reported net income for Year Four?

a. Reported net income was not affected.

b. The decision made reported net income $300 higher.

c. The decision made reported net income $5,700 higher.

d. The decision made reported net income $6,000 higher.

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A company ends Year Three with accounts receivable of $300,000, an allowance for doubtful accounts of $15,000, sales of $900,000, and bad debt… was first posted on November 26, 2020 at 10:05 am.
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