The Dubious Company operates in an industry where all sales are made on account.The company has experienced bad debt losses of 1% of credit sales in prior periods.
Presented below is the company's forecast of sales and expenses over the next three years.
Required:
a.Calculate Bad Debt Expense and net income for each of the three years,assuming uncollectible accounts are estimated as 1.0% of sales.
b.Assume that the company changes its estimate of uncollectible credit sales to 1.0% in Year 1,2.0% in Year 2 and 1.5% in Year 3.Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.

Question

The Dubious Company operates in an industry where all sales are made on account.The company has experienced bad debt losses of 1% of credit sales in prior periods.
Presented below is the company's forecast of sales and expenses over the next three years.
  Required:
a.Calculate Bad Debt Expense and net income for each of the three years,assuming uncollectible accounts are estimated as 1.0% of sales.
b.Assume that the company changes its estimate of uncollectible credit sales to 1.0% in Year 1,2.0% in Year 2 and 1.5% in Year 3.Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.

Quizplus · Accepted Answer

The Answer of The Dubious Company operates in an industry where all sales are made on account.The company has experienced bad debt losses of 1% of credit sales in prior periods.
Presented below is the company's forecast of sales and expenses over the next three years.
  Required:
a.Calculate Bad Debt Expense and net income for each of the three years,assuming uncollectible accounts are estimated as 1.0% of sales.
b.Assume that the company changes its estimate of uncollectible credit sales to 1.0% in Year 1,2.0% in Year 2 and 1.5% in Year 3.Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.

The Dubious Company Operates in an Industry Where All Sales