The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.20% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales $ Revenue 377,000 Bad Debt Expense Other Expenses Net Income $ 383,000 $ 382,000 Unknown Unknown Unknown 331,000 334,000 337,750 Unknown Unknown Unknown
The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.20% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales $ Revenue 377,000 Bad Debt Expense Other Expenses Net Income $ 383,000 $ 382,000 Unknown Unknown Unknown 331,000 334,000 337,750 Unknown Unknown Unknown
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
1.20% of credit sales in prior periods.
Presented below is the company's forecast of
sales and expenses over the next three years.
Year 1
Year 2
Year 3
Sales $
Revenue 377,000
Bad Debt
Expense
Other
Expenses
Net
Income
$
383,000
Ś
382,000
Unknown Unknown Unknown
331,000 334,000 337,750
Unknown Unknown Unknown
Required:
Calculate Bad Debt Expense and net income
for each of the three years, assuming
uncollectible accounts are estimated as 1.20%
of sales.
Assume that the company changes its
estimate of uncollectible credit sales to 1.20%
in Year 1, 2.20% in Year 2 and 1.70% in Year 3.
Calculate the Bad Debt Expense and net
income for each of the three years under this
alternative scenario.
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