Comparing the Percentage of Sales and the Percentage of Receivables Methods Keefer Company uses the percentage of sales method for computing bad debt expense. As of January 1, 2009, the balance of Allowance for Bad Debts was $200,000. Write-offs of uncollectible accounts during 2009 totaled $240,000. Reported bad debt expense for 2009 was

$320,000, computed using the percentage of sales method.

Keith & Harding, the auditors of Keefer’s financial statements, compiled an aging accounts receivable analysis of Keefer’s accounts at the end of 2009. This analysis has led Keith & Harding to estimate that, of the accounts receivable Keefer has as of the end of 2009, $700,000 will ultimately prove to be uncollectible.

Given their analysis, Keith & Harding, the auditors, think that Keefer should make an adjustment to its 2009 financial statements. What adjusting journal entry should Keith &

Harding suggest?