Homework Answers
Bad debt expense under direct write off method = $9,900
Bad debt expense under allowance method = 1 3/4% of sales
= 620,000 x 1 3/4%
= $10,850
Excess of Bad debt expense under allowance method = Bad debt expense under allowance method - Bad debt expense under direct write off method
= 10,850 - 9,900
= $950
Net income under direct write off method = $68,200
Net income under allowance method = Net income under direct write off method - Excess of Bad debt expense under allowance method
= $68,200 - 950
= $67,250
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effect of doubtful accounts on net income
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