The following accounts receivable information is for MaScare Company:

2003

2002

2,001

Accounts receivable

$100,000

$30,000

$50,000

Allowance for bad debts

4,000

2,000

3,000

Sales revenue

210,000

180,000

170,000

Required

1. With the big increase in the Allowance for Bad Debts in 2003, MaScare Company is concerned that the creditworthiness of its customers declined from 2002 to 2003. Is there any support for this view in the accounts receivable data? Explain.

2. Interpretive Question: Is there any cause for alarm in the accounts receivable data for 2003? Explain.