Call systems company, a telephone service and supply company, has just Completed its fourth year of operations. The direct right off method of recording bad debt expense has been used during the entire period. Because of substantial increase in sales volume and the amount of uncollectible accounts, the company is considering changing th completed its fourth year of operations. The direct write off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume in the amount of uncollectible accounts, the company is considering changing to the allowance method. Information as requested as to the effect that an annual provision of 1/2% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of allowance for doubtful accounts would have been at the end of each year. The following doubt I have been obtained from the accountants:

e Written off as ble Year Sales off 2nd 3rd 4th 1st $1,110,000 2nd 1,860,000 3rd 2,710,000 4th 3,680,000 $1,000 3,150 11,800 18,050 $1,000 1,500 3,400 $1,650 2,.700 4,150 $5,700 6,150 $7,750 Call Systems Company Schedule of Bad Debt Expense of Allowance Account, End of Year 3rd