Cash sales $135,000 Credit sales 512,000 Accounts receivable determined to be uncollectible 9,650…

Cash sales

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$135,000

Credit sales

512,000

Accounts receivable determined to be uncollectible

9,650

The firm's estimated rate for bad debts is 2.2% of credit sales.

Question 1: Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming 0,000 of the sales would have been lost if credit sales were not offered?

 

 

Question 2: On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020. 

Dec. 31, 2019

Interest Receivable 

?

 

 

Interest Income 

 

 

 

 

 

Apr. 30, 2020

Cash 

?

 

 

Notes Receivable 

 

?

 

Interest Receivable 

 

?

 

Interest Income