The Dubious Company operates in an industry where all sales are made of account. The of 1.70% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 2 $ 392,000 Unknown 338,000 Year 3 $ 391,000 Unknown 337,750 Unknown Unknown Sales Revenue Bad Debt Expense Other Expenses Net Income Year 1 $ 386,000 Unknown 332,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.70% o sales. b. Assume that the company changes its estimate of uncollectible credit sales to 1.70% in Year 1, 2.70% in Year 2 and 2.20% 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 are made of account. The of 1.70% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 2 $ 392,000 Unknown 338,000 Year 3 $ 391,000 Unknown 337,750 Unknown Unknown Sales Revenue Bad Debt Expense Other Expenses Net Income Year 1 $ 386,000 Unknown 332,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.70% o sales. b. Assume that the company changes its estimate of uncollectible credit sales to 1.70% in Year 1, 2.70% in Year 2 and 2.20% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required A Required B
Assume that the company changes its estimate of uncollectible credit sales to 1.70% in Year 1, 2.70% in Year 2 and 2.20% in
Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.
Bad Debt Expense
Net Income
Year 1
Year 2
Year 3
Transcribed Image Text:The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses
of 1.70% of credit sales in prior periods.
Presented below is the company's forecast of sales and expenses over the next three years.
Year 2
$ 392,000
Unknown
338,000
Unknown
Sales Revenue
Bad Debt Expense
Other Expenses
Net Income
Year 1
$ 386,000
Unknown
332,000
Unknown
Required:
a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.70% of
sales.
b. Assume that the company changes its estimate of uncollectible credit sales to 1.70% in Year 1, 2.70% in Year 2 and 2.20% in Year 3.
Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.
Required A Required B
Complete this question by entering your answers in the tabs below.
Bad Debt Expense
Net Income
Year 3
$ 391,000
Unknown
337,750
Unknown
Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as
1.70% of sales.
Year 1
Year 2
Year 3
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