The vice president for Tres Corporation provides you with the following list of accounts receivable written off in the current year. (These accounts were recognized as bad debt expense at the time they were written off; i.e., they were using the direct write-off method.)

\begin{tabular}{llr}

\hline \multicolumn{1}{c}{ Date } & \multicolumn{1}{c}{ Customer } & Amount \\

\hline March 30 & Rasmussen Company & $\$ 12,000$ \\

July 31 & Dodge Company & 7,500 \\

September 30 & Larsen Company & 10,000 \\

December 31 & Peterson Company & 12,000 \\

\hline

\end{tabular}

Tres Corporation's sales are all on a $\mathrm{n} / 30$ credit basis. Sales for the current year total $\$ 3,600,000$, and analysis has indicated that uncollectible receivable losses historically approximate 1.5 percent of sales.

1. Do you agree or disagree with Tres Corporation's policy concerning recognition of bad debt expense? Why or why not?

2. If Tres were to use the percent of sales method for recording bad debt expense, by how much would net income change for the current year?