Bad Debt Expense: Percentage of Credit Sales Method

The Glass House, a glass and china store, sells nearly half its merchandise on credit. During the past 4 years, the following data were developed for credit sales and losses from uncollectible accounts:

Year of Sales	Credit Sales	Losses from Uncollectible Accounts*
2020		$197,000			$12,608
2021		202,000			13,299
2022		212,000			13,285
2023		273,000			22,274
Total		$884,000			$61,466

*Losses from uncollectible accounts are the actual losses related to sales of that year (rather than write-offs of that year).

3. Conceptual Connection: The weighted average for the 4 years (rounded to three decimals) is 0.070

If credit sales for 2024 are $400,000, what rate would you recommend to estimate bad debts? A rate closer to (fill in the blank ) would be more conservative.

1. Calculate the loss rate for each year from 2020 through 2023. Round your answers to three decimal places. 2. Is there a significant change in the loss rate over time? 3. Conceptual Connection: The weighted average for the 4 years (rounded to three decimals) is If credit sales for 2024 are $400,000, what rate would you recommend to estimate bad debts? A rate closer to X would be more conservative. 1. Calculate the loss rate for each year from 2020 through 2023. Round your answers to three decimal places. 2. Is there a significant change in the loss rate over time? 3. Conceptual Connection: The weighted average for the 4 years (rounded to three decimals) is If credit sales for 2024 are $400,000, what rate would you recommend to estimate bad debts? A rate closer to X would be more conservative