Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. 0-30 days past due 31-90 days past due Over 90 days past due Accounts receivable amount $160,000 $85,000 $65,500 Percent uncollectible 7% 20% 40% Total per category ? ? ? Total uncollectible ? To manage earnings more favorably, Noren Company considers changing the past-due categories as follows. 0-60 days past due 61-120 days past due Over 120 days past due Accounts receivable amount $160,000 $50,500 $55,000 Percent uncollectible 7% 20% 40% Total per category ? ? ? Total uncollectible ? A. Complete each table by filling in the blanks. 0-30 days past due 31-90 days past due Over 90 days past due Accounts receivable Amount $160,000 $85,000 $65,500 Percent uncollectible 7% 20% 40% Total per category $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Total uncollectible $fill in the blank 4 0-60 days past due 61-120 days past due Over 120 days past due Accounts receivable Amount $160,000 $50,500 $55,000 Percent uncollectible 7% 20% 40% Total per category $fill in the blank 5 $fill in the blank 6 $fill in the blank 7 Total uncollectible $fill in the blank 8 B. Determine the difference between totals uncollectible. $fill in the blank 9 C. Complete the following comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. NOREN COMPANY Comparative Income Statments Year Ended December 31, 2019 Original Categories Categories Change Net Credit Sales $1,250,000 $1,250,000 Cost of Goods Sold 60,000 60,000 Gross Margin $1,190,000 $1,190,000 Expenses: General and Administrative Expense $300,500 $300,500 Bad Debt Expense fill in the blank 10 fill in the blank 11 Total Expenses $fill in the blank 12 $fill in the blank 13 Net Income (Loss) $fill in the blank 14 $fill in the blank 15 D. How does the new total uncollectible amount affect net income and net accounts receivable? a. Bad debt expense is lower, net income is higher, and net receivables are higher. b. Bad debt expense is lower, net income is higher, and net receivables are lower. c. Bad debt expense is higher, net income is lower, and net receivables are higher. d. Bad debt expense is higher, net income is lower, and net receivables are lower.

Question

Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019.

	0-30 days past due	31-90 days past due	Over 90 days past due
Accounts receivable amount	$160,000	$85,000	$65,500
Percent uncollectible	7%	20%	40%
Total per category	?	?	?
Total uncollectible			?

To manage earnings more favorably, Noren Company considers changing the past-due categories as follows.

	0-60 days past due	61-120 days past due	Over 120 days past due
Accounts receivable amount	$160,000	$50,500	$55,000
Percent uncollectible	7%	20%	40%
Total per category	?	?	?
Total uncollectible			?

A. Complete each table by filling in the blanks.

	0-30 days past due	31-90 days past due	Over 90 days past due
Accounts receivable Amount	$160,000	$85,000	$65,500
Percent uncollectible	7%	20%	40%
Total per category	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Total uncollectible			$fill in the blank 4

	0-60 days past due	61-120 days past due	Over 120 days past due
Accounts receivable Amount	$160,000	$50,500	$55,000
Percent uncollectible	7%	20%	40%
Total per category	$fill in the blank 5	$fill in the blank 6	$fill in the blank 7
Total uncollectible			$fill in the blank 8

B. Determine the difference between totals uncollectible.

$fill in the blank 9

C. Complete the following comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories.

NOREN COMPANY Comparative Income Statments Year Ended December 31, 2019
	Original Categories	Categories Change
Net Credit Sales	$1,250,000	$1,250,000
Cost of Goods Sold	60,000	60,000
Gross Margin	$1,190,000	$1,190,000
Expenses:
General and Administrative Expense	$300,500	$300,500
Bad Debt Expense	fill in the blank 10	fill in the blank 11
Total Expenses	$fill in the blank 12	$fill in the blank 13
Net Income (Loss)	$fill in the blank 14	$fill in the blank 15

D. How does the new total uncollectible amount affect net income and net accounts receivable?

a.	Bad debt expense is lower, net income is higher, and net receivables are higher.
b.	Bad debt expense is lower, net income is higher, and net receivables are lower.
c.	Bad debt expense is higher, net income is lower, and net receivables are higher.
d.	Bad debt expense is higher, net income is lower, and net receivables are lower.