The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts:

Required:
1. Calculate the average percentage of losses from uncollectible accounts for 2007 through
2010.
2. Assume that the credit sales for 2011 are $1,260,000 and that the weighted average percentage calculated in (1) is used as an estimate of losses from uncollectible accounts for 2011 credit sales. Determine the bad debt expense for 2011 using the percentage of credit sales method.
3. Do you believe this estimate of bad debt expense is reasonable?
4. How would you estimate 2011 bad debt expense if losses from uncollectible accounts for 2010 were $30,000? What other action would management consider?

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Losses from Year Credit Sales Uncollectible Accounts 2007 883,000 2008 2009 2010 952,000 1,083,000 1,189,000 13,125 14,840 16,790 16,850