2301 KEY ASSIGNMENT You are the exports food and candy items throughout the world. The company is finalizing its 3rd quarter financial results. All adjustments have been made for the 3d quarter except the adjustment for Bad Debts Expense. The preliminary 3 d quarter results along with the 1 accountant for London Imports and Exports. The company imports and and 2nd quarter results are shown below. London Imports and Exports Quarterly Income Statements (amounts in thousands of U.S. dollars) (preliminary) (as reported) (as reported) S135,800 S135,460$130,100 Net Sales Cost of Goods Sold Gross Profit 58,400 S77,400 (58,250) (55,990) 77,210$74,110 Selling, General, & Admin Expenses (56,560) (53975) (53,690 Bad Debts Expense Income Before Income Tax Income Tax Expense 20,840 (5,620) $15,220 (6,050) 17,185 5,155) $12,030 (4,200) 16,220 (5,020) $11,200 Net Income The CFO asked you to look at the Allowance for Doubtful Accounts and use the Aged Accounts Receivable to calculate the adjustment needed for bad debts expense for the 3rd quarter. The CFO stated that he knows the customers are slower at paying this quarter but he wants the Allowance for Doubtful Accounts to not be increased; in fact he's encouraging you to decrease it so it has an adjusted balance of $8,000. He wants you to play around with the estimated bad debt loss rates to get the number he wants for the adjusted balance of the Allowance account. You are confused, so you decide to analyze the Allowance for Doubtful Accounts, and you came up with the following summary of the T account below Allowance for Doubtful Accounts Q1 Write Offs Q2 Write Offs Q3 Write Offs 7900 4110 4200 7990 4120 6050 9920 Jan. 1 Balance Forward 01 Bad Debts Estimate March 31 Adjusted 02 Bad Debts Estimate June 30 Adjusted 40301 .. 5890 September 30 Unadjusted