The president of the business outlined in the example question attends an industry update seminar at which the speaker says that the average bad debts experience of businesses in this field is about 1 percent of sales. Assume that the business adopts this method.

Determine its bad debts expense for the first year and for the balances in its accounts receivable and allowance for doubtful accounts at the end of the year.

The following two questions are comprehensive for this chapter. They draw upon the discussion throughout the chapter and the answers to the example questions in the chapter. In answering these two comprehensive questions you should also refer to the figures in the chapter.