Here is the 1999 Annual Report for Sears. Roebuck and Co..

a. What would Sears Income Statement and Balance Sheet look like in 1999 if Sears had accrued the same provision for uncollectible accounts as it had in 1998? (You may ignore any potential tax effects.) In particular, what would be: Net Income, Total Assets, Total Liabilities and Total shareholders equity of Sears had it accrued the same provision for uncollectible accounts as in 1998

b.Based on any information in the case that you find relevant, what is an appropriate level for Sears' provision and allowance for uncollectible accounts in 1999?

Consolidated Financial Statements Income Statement (in millions) 1995 1996 1997 1998 1999 Revenues $31,133 $33,752 $36,649 $36,957 $36,728 Merchandise sales and services 3,702 4.313 4,925 4,618 4,343 Credit revenues 34,835 38,064 41,574 41,575 41,071 Total revenues Expenses Cost of sales, buying and occupancy 23,160 24,889 26,985 27,444 27, 212 7,428 8,059 8,394 8,384 8,418 Selling and administrative 589 971 1,532 1,287 871 Provision for uncollectible accounts 1,953 2,062 2,669 2,605 2,157 Other 33,130 35,981 39,580 39,720 38,658 Total costs and expenses 1,705 2,083 1,994 1,855 2,413 Operating income 23 22 106 (41) (56) Other income, net 766 904 703 834 912 Income tax provision $1,801 $1,271 $1,188 $1,048 $1,453 Net Income