Answer
If bad debt expense was computed using the percentage of-sales approach, the net income would differ by 13, 670.
Work Step by Step
Bad Debt Expense – 2% of Sales = 48,000 (2,400,000 X 2%)
Bad Debt Expense – Direct Write-Off = 34,330 (7,800 + 9,700 + 7,000 + 9,830)
48,000 – 34,330= 13, 670
Net income would be 13,670 lower under the percentage of sales approach.
