Question

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Johnstone Inc. had a net loss of $89,300 prior to the following transactions: • . The company wrote off accounts of customers owing $35,500. The company recovered $8,300 in receivables from customers whose accounts had previously been written off. The company recorded bad debts expense of $49,200 based on an aging of its receivables. What would Johnstone's net income (or loss) be after these transactions? (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Net income (loss) $

Answer 1

A B E 1 Ans The Answer could be solved based of two assumption, whether the company maintained the provision for doubtful accounts or not Assumption1 : Company maintain provision for doubtful account WWUL ULU Unadjusted Net loss Writeoff of Customer Account Recovery from customer Bad Debt Expenses Net Loss -89300 O Note-1 O Note-1 -49200 -138500 2 Note-1 when company maintain provision account for doubtful debts then this transaction are adjusted against that ledger and doesn't affect P&L statement. mt Assumption 2 : Company Doesn't maintain provision for doubtful account Unadjusted Net loss Writeoff of Customer Account Recovery from customer Bad Debt Expenses Net Loss -89300 -35500 8300 -49200 -165700