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What amount should it report as bad debts expense

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Question - HOTEL Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2022, HDTEL decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debts expense would have been P380,000 instead of P285,000. In 2022, bad debts expense will be P120,000 instead of P90,000.

Required - If HOTEL's tax rate is 30%, what amount should it report as bad debts expense in the income statement as an effect of change?

Reference no: EM133179938

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