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Fortune Accounting reports $1,455,000 in credit sales for 2022 and $1,678,430 in 2023. It has...

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Accounting

Fortune Accounting reports $1,455,000 in credit sales for 2022 and $1,678,430 in 2023. It has an $825,000 accounts receivable balance at the end of 2022 and $756,000 at the end of 2023. Fortune uses the balance sheet method to record bad debt estimation at 7.5% during 2022. To manage earnings more favorably, Fortune changes bad debt estimation to the income statement method at 5.5% during 2023.
A. Determine the bad debt estimation for 2022.
B. Determine the bad debt estimation for 2023.
C. Describe a benefit to Fortune in 2023 as a result of its earnings management.

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