Nutty Productions Inc. generated service revenue of $50,000 and income from operations of $20,000. The company estimates that, had it extended credit, it would have instead generated $90,000 of service revenue, but it would have incurred $35,000 of additional expenses for wages and bad debts.

1. 1-a. Using these estimates, calculate the amount by which Income from Operations would increase (decrease).

1. 1-b. Should the company extend credit?

• Yes

• No