Chapter 8, Problem 8.1TIF

To determine

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

To evaluate: The decision of company’s chief accountant and president to use the lower percentage to improve earnings, and describe whether they both acting in an ethical manner.