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The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1% of credit
The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1% of credit sales in prior periods Presented below is the company's forecast of sales and expenses over the next three years Year 3 Year 1 368,000 Unknown 340,000 Unknown Year 2 S 374,000 $ 373,000 Sales Revenue Bad Debt Expense Other Expenses Net Income $ Unknown 342,000 Unknown Unknown 342,750 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.0% of sales b. Assume that the company changes its estimate of uncollectible credit sales to 1.0% in Year 1, 2.0% in Year 2 and 1.5% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario
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