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What amount should report as the cumulative effect

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Question - Blossom 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, Blossom decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $383,300 instead of $294,000. In 2017, bad debt expense will be $132,600 instead of $97,520.

If Blossom's tax rate is 25%, what amount should it report as the cumulative effect of changing the estimated bad debt rate?

Reference no: EM132468566

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