Q 4.26: douglas international consistently estimated its bad debt expense at 2 percent of credit sales. in 2017, however, douglas determines that it should revise downward the estimate of bad debts for the current year's credit sales to 1.5 percent. douglas uses the revised estimate of 1.5% and calculates bad debt expense of $420,000. how is the change in the estimated bad debt expense reported in douglas' 2017 financial statements?

$420,000

Explanation:

Based on the information given the change in the estimated bad debt expense that will be reported in the financial statements will be the amount of $420,000 which is the amount that was newly calculated as bad debt expenses after using he made use of the revised estimate of 1.5%. Based on the this $420,000 bad debt expenses will be the amount that will be reported in the financial statement as an ORDINARY INCOME.

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"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

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