The chief accountant for Dickinson Corporation provides

you with the #1956

The chief accountant for Dickinson Corporation provides you with the following list of accounts
receivable that were written off in the current year:Dickinson Corporation follows the policy of
debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this
procedure is appropriate for financial statement purposes.All of Dickinson Corporation's sales
are on a 30-day credit basis, and the accounts written off all related to current year sales. Sales
for the year total $3.2 million, and your research suggests that bad debt losses approximate 2%
of sales.Instructions(a) Do you agree with Dickinson Corporation’s policy on recognizing bad
debt expense? Why?(b) By what amount would net income differ if bad debt expense was
calculated using the allowance method and percentage-of-sales approach?(c) Under what
conditions is using the direct write-off method justified?View Solution:
The chief accountant for Dickinson Corporation provides you with the

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