As the management accountant for the Tyson Company you have been asked to construct afinancial planning modelfor 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:75% of the company's credit sales are collected in the month of sale, 20% in the month following the month of sale, and 5% are uncollectible.

Credit Sales:January 2016, $142,000; February 2016, $137,500; March 2016, $122,500.

Required:

2.Give an estimate of bad debts for each of the three months, January through March, under the following assumptions regarding the rate of uncollectible accounts: 1%, 3%, 5% (base case), and 8%.

1% 3% 5% 8%

January

February

March