Analysis of Accounts Receivable Quantity and Quality The following accounts receivable information is for Rouge Company:

Required:
1. With the big increase in Allowance for Bad Debts in 2009, Rouge Company is concerned that the creditworthiness of its customers declined from 2008 to 2009. Is there any support for this view in the accounts receivable data? Explain.
2. Interpretive Question: Is there any cause for alarm in the accounts receivable data for 2009? Explain.

Transcribed Image Text:

Accounts receivable Allowance for bad debts Sales revenue 2009 $ 98,000 5,000 190,000 2008 $ 50,000 2,800 175,000 2007 $ 70,000 4,000 165,000