Vandross Company has recorded bad debt expense in thepast at a rate of 1½%...

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Accounting

Vandross Company has recorded bad debt expense in thepast at a rate of 1½% of accounts receivable, based on an aginganalysis. In 2017, Vandross decides to increase its estimate to 2%.If the new rate had been used in prior years, cumulative bad debtexpense would have been $380,000 instead of $285,000. In 2017, baddebt expense will be $120,000 instead of $90,000. If Vandross’s taxrate is 30%, what amount should it report as the cumulative effectof changing the estimated bad debt rate?

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Solution Given data Bad debts expenses of 15 of Accounts receivables In 2017 Vandross decides to increase its estimate to 2 If the new rate had been used in prior years cumulative bad debt See Answer

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In: AccountingVandross Company has recorded bad debt expense in thepast at a rate of 1½% of...Vandross Company has recorded bad debt expense in thepast at a rate of 1½% of accounts receivable, based on an aginganalysis. In 2017, Vandross decides to increase its estimate to 2%.If the new rate had been used in prior years, cumulative bad debtexpense would have been $380,000 instead of $285,000. In 2017, baddebt expense will be $120,000 instead of $90,000. If Vandross’s taxrate is 30%, what amount should it report as the cumulative effectof changing the estimated bad debt rate?