Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 15

Effect of doubtful accounts on net income
During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been if the allowance method had been used and the company estimated that 1% of sales would be uncollectible.