solution
ﾃつ
ﾃつGilmore Electronics had the following data for a recent year:
ﾃつﾃつ Cash salesﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつ $135,000
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Order Paper Nowﾃつﾃつ Credit salesﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつ 512,000
ﾃつﾃつ Accounts receivable determined
ﾃつﾃつ to be uncollectibleﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつ ﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつﾃつ9,650
ﾃつ
The firmﾃ｢竄ｬ邃｢s estimated rate for bad debts is 2.2% of credit sales.
ﾃつ
Required:
1. Prepare the journal entry to write off the uncollectible accounts.
2. Prepare the journal entry to record the estimate of bad debt expense.
3. If Gilmore had written off $3,000 of receivables as uncollectible during the year, how much would bad debt expense reported on the income statement have changed?
4. CONCEPTUAL CONNECTION If Gilmoreﾃ｢竄ｬ邃｢s estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmoreﾃ｢竄ｬ邃｢s income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?
ﾃつ
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