The company had an accounts receivable balance of $80,000 and an allowance for uncollectible accounts balance of $2,000 (credit) at the end of the year (before any adjusting entry). The accountant determined that 10% of the ending accounts receivable balance will ultimately 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 incomefor the year, would the increase or decrease the % used to calculate the uncollectible account expense?