The company had an accounts receivable balance of $105,000 and an allowance for uncollectible accounts balance of $3,000 (credit) at the end of the year (before any adjusting entry). Sales revenue for the year totaled $800,000. The accountant determined that 1% of this year's sales will be uncollectible.
a) How much will be reported as BAD DEBT/UNCOLLECTIBLE ACCOUNTS EXPENSE ON THE INCOME STATEMENT?
b) If management wanted to increase net income for the year, would the increase or decrease the % used to calculate the uncollectible account expense?