Reporting Accounts Receivable Turbo Manufacturing reported sales on account of $3,000,000 and bad debt expense of $40,000 for the current year. Adams Department Stores reported sales on account of $2,600,000 and bad debt expense of $57,000. Jacks Land Development Corporation reported sales on account of $2,000,000 and bad debt expense of $90,000.

a. What factors might cause the ratio of bad debt expense to total sales to be quite different in these three companies?

b. Does the fact that Jacks Land Development has the highest estimated loss from bad debts mean that it is the least desirable investment alternative among the three companies? Explain.

c. How may the accounts receivable turnover ratio affect the accuracy in estimating the bad debt percentage?