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My goal was to keep bad debt losses at below .2% of sales. Losses were .6% of sales for calendar 2003. This occurred because senior management overrode three credit decisions, which resulted in large bad debt loss. What is the best way to document this problem?

Answer: Provide two calculations. The first showing the actual bad debt losses as a percent of sales of .6%. The other showing Adjusted bad debt write offs as a percent of sales in which you subtract out the losses resulting from management overrides. This second calculation should not be overly detailed. It may be enough to list the names of the customers and the reason as "Management Override."

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