Estimate the final inventory

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Question - In the balance sheet at the end of 2018, its first year of operations, Dinty, Inc. reported an allowance for uncollectible accounts of $82,000 CR.

During its second year, Dinty wrote off $23,000 of accounts receivable it had attempted to collect and failed. The balance in the allowance account at the end of 2019 was $74,000 CR.

Credit sales for the year were $2,000,000, and cash collections from credit customers totaled $1,590,000.

1. What bad debt expense would Dinty report in its second-year income statement?

2. What net amount would Dinty report for accounts receivable in its second year-end balance sheet?

3. Briefly summarize the steps in the gross profit method to estimate the final inventory and indicate when this method can be used.

Reference no: EM133102572

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