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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 1.60% of credit

The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.60% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years.

Sales Revenue $ 388,000 $ 394,000 $ 393,000
Bad Debt Expense Unknown Unknown Unknown
Other Expenses 337,000 334,000 341,750
Net Income Unknown Unknown Unknown

Required:

a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.60% of sales.

c.

Assume that the company changes its estimate of uncollectible credit sales to 1.60% in year 1, 2.60% in year 2 and 2.10% 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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