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Cumulative effect of changing the estimated bad debt rate

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Question: Carla Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2017, Carla decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $384,500 instead of $304,200. In 2017, bad debt expense will be $129,500 instead of $92,180. If Carla's tax rate is 28%, what amount should it report as the cumulative effect of changing the estimated bad debt rate?

Reference no: EM131693771

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