Kingbird 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, Kin
Kingbird 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, Kindgbird decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $387,800 instead of $299,000. In 2017, bad debt expense will be $122,400 instead of $91,130. If Kingbird’s tax rate is 27%, what amount should it report as the cumulative effect changing the estimated bad rate?
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