What-If Analysis As the management accountant for the Tyson Company you have been askedto construct a financial planning model for collection of accounts receivable and then to performa what-if analysis in terms of the assumption regarding estimated uncollectible accounts. You areprovided with the following information:Collection Pattern for Credit Sales: 65% of the company’s credit sales are collected in the monthof sale, 30% in the month following the month of sale, and 5% are uncollectible.Credit Sales: January 2019, $100,000; February 2019, $120,000; March 2019, $110,000.Required1. Generate a spreadsheet model regarding estimated bad debts expense under the following assumptionsregarding the rate of uncollectible accounts: 1%, 3%, 5% (base case), and 8%. Prepare an estimate of baddebts expense for each of three months, January through March, and for the quarter as a whole.2. What is the value to Tyson Company of creating a model and then performing the what-if analysis?
What-If Analysis As the management accountant for the Tyson Company you have been asked
to construct a financial planning model for collection of accounts receivable and then to perform
a what-if analysis in terms of the assumption regarding estimated uncollectible accounts. You are
provided with the following information:
Collection Pattern for Credit Sales: 65% of the company’s credit sales are collected in the month
of sale, 30% in the month following the month of sale, and 5% are uncollectible.
Credit Sales: January 2019, $100,000; February 2019, $120,000; March 2019, $110,000.
Required
1. Generate a spreadsheet model regarding estimated
regarding the rate of uncollectible accounts: 1%, 3%, 5% (base case), and 8%. Prepare an estimate of bad
debts expense for each of three months, January through March, and for the quarter as a whole.
2. What is the value to Tyson Company of creating a model and then performing the what-if analysis?
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