Using the income statement approach, the bad debt expense is determined using a percentage of total credit sales. Thus, bad debt expense is US $20,000$400,000 credit sales x 5% estimated bad debt rate).

When preference shares are cumulative, the dividend, whether earned or not, is deducted from profit or loss from continuing operations and profit or loss, or added to any loss for the year, in computing earnings or loss. When preference shares are noncumulative, an adjustment is made for dividends declared. If the dividend is cumulative only if earned, no adjustment is necessary except to the extent of available income: that is, the preference dividends accumulate only to the extent of profit or loss.

The cash receipts for April equal April's cash sales (US $4,000,000 * 30% = US $1.200, 000), 40% of April's credit sales, and 58% of March's credit sales. Consequently, total cash receipts equal US $3,781,600 [$1,200,000 + ($4,000,000 * 40% x 70%) + ($3,600,000 x 58% x 70%)].

PERT was developed to aid managers in controlling large, complex projects. PERT analysis includes probabilistic estimates of activity completion times. Three time estimates are made: Optimistic, most likely, and pessimistic. The time estimates for an activity are assumed to approximate a beta probability distribution. PERT approximates the mean of the beta distribution by dividing the sum of the optimistic time, the pessimistic time, and four times the most likely time by six.