Bad Debt Reporting - chapt 7

Bad Debt Reporting - chapt 7 - (Bad Debt Reporting) The...

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(Bad Debt Reporting) The chief accountant for Emily Dickinson Corporation provides you with the following list of accounts receivable written off in the current year. Date Customer Amount March 31 E. L. Masters Company $7,800 June 30 Stephen Crane Associates 6,700 September 30 Amy Lowell's Dress Shop 7,000 December 31 R. Frost, Inc. 9,830 Emily Dickinson Corporation 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 debts. All of Emily Dickinson Corporation's sales are on a 30-day credit basis. Sales for the current year total $2,200,000, and research has determined that bad debt losses approximate 2% of sales. Instructions
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Do you agree or disagree with Emily Dickinson Corporation policy concerning recognition of bad debt expense? Why or why not? By what amount would net income differ if bad debt expense was computed using the
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This note was uploaded on 04/26/2010 for the course ACCT 320 taught by Professor Son during the Spring '10 term at Morgan.

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Bad Debt Reporting - chapt 7 - (Bad Debt Reporting) The...

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