Problem 5-83A (Algorithmic) 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 2016 2017 Credit Sales $200,000 203,000 213,000 235,000 $851,000 Losses from Uncollectible Accounts* 12,700 13,297 13,313 19,388 $58,698 2018 2019 Total *Losses from uncollectible accounts are the actual losses related to sales of that year (rather than write-offs of that year) Required: 1. Calculate the loss rate for each year from 2016 through 2019. Round your answers to three decimal places, Year Loss Rate 2016 2017 2018 2019 Year Loss Rate 2016 2017 2018 2019 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 2020 are $400,000, what rate would you recommend to estimate bad debts? A rate closer to would be more conservative. 4. If credit sales for 2020 are $410,000 and using the rate you recommended above, record bad debt expense for 2020. Round your answer to three decimal places. Record adjusting entry for bad debt expense estimate 5. Conceptual Connection: Using the data from 2016 through 2019, estimate the change in income from operations in total for those 4 years assuming (a) the average gross margin is 25% and (b) 50% of the sales would have been lost if no credit was granted. Round your answers to the nearest dollar, if required. in gross margin in income from operations