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

 

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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 1.40% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Sales Revenue Bad Debt Expense Other Expenses Net Income C. Bad Debt Expense Net Income Year 1 $382,000 Unknown 336,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.40% of sales. Bad Debt Expense Net Income Year 1 Year 3 $ 387,000 Unknown 332,750 Unknown Unknown Year 2 $ 388,000 Unknown 336,000 Year 1 Year 2 Assume that the company changes its estimate of uncollectible credit sales to 1.40% in year 1, 2.40% in year 2 and 1.90% in year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario. Year 3 Year 2 Year 3 The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.40% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Sales Revenue Bad Debt Expense Other Expenses Net Income C. Bad Debt Expense Net Income Year 1 $382,000 Unknown 336,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.40% of sales. Bad Debt Expense Net Income Year 1 Year 3 $ 387,000 Unknown 332,750 Unknown Unknown Year 2 $ 388,000 Unknown 336,000 Year 1 Year 2 Assume that the company changes its estimate of uncollectible credit sales to 1.40% in year 1, 2.40% in year 2 and 1.90% in year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario. Year 3 Year 2 Year 3

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