The Dubious Company operates in an industry where all sales are made on account.

Question

The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.00% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years Year 1 Year 2 Year 3 Sales Revenue $ 377,000 $ 383,000 $382,000 Bad Debt Other Expenses Net Income Unknown 337,000 Unknown Unknowrn 334,000 Unknowrn Unknown 336,750 Unknown Expense Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.00% of sales Year 1 Year 2 Year 3 Bad Debt Expense Net Income Assume that the company changes its estimate of uncollectible credit sales to 1.00% in year 1, 2.00% in year 2 and 1.50% in year 3·Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario Year 1 Year 2 Year 3 Bad Debt Expense Net Income

Explanation / Answer

A.Calculation of Bad debt expense and net income for each three years, assuming uncollectible accounts are estimated as 1% of sales.

B.Calculation of Bad debt expense and net income for each three years, under alternative scenarios.

Sl No Particulars Year 1 Year 2 Year 3 a Sales Revenue $377,000 $383,000 $382,000 b Bad debt expense (1% of sales) $3,770 $3830 $3,820 c Other Expenses $337,000 $334,000 $336,750 d Net Income(a-b-c) $36,230 $45,170 $41,430

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.