Business, 25.03.2021 20:50 mj1226

Prior to 2020, Gonzo record bad debt expense at a rate of 3% of net sales. Based on improving economic conditions for its customers, at the beginning of 2020 management decided to change its estimate to 2% of net sales. Gonzo began making credit sales in 2018 and if the new rate had been used in prior years, bad debt expense would have been $150 lower in 2018 and $120 lower in 2019. Bad debt expense for the current year is based on the new rate and is properly included in selling, general and administrative expenses in the current period. In addition to recording 2020 bad debt expense based on 2% of net sales, in what other ways would the change in the rate used to record bad debt expense impact the 2020 financial statements of Gonzo

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Prior to 2020, Gonzo record bad debt expense at a rate of 3% of net sales. Based on improving econom...

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