Company B also uses the Analysis of Receivables method. However, Management has asked us to take a look at the Income Statement Impact if we change the Uncollectible Percentages for Each Budget of Aging. The aging schedule looks like the following:

Aging Category As Is Proposed

Current (Not past due) 3% 2%

1 60 past due 5% 4%

61+ days past due 9% 8%

The balances in the accounts before any adjustments are as follows: current Sales are $400,000, Allowance for Doubtful Accounts has a Credit balance of $250, and bad debt expense has a debit balance of $2,000.

What would be the adjusting entry under the As Is Calculation?

What would be the adjusting entry under the Proposed Calculation?:

Customer Total Due Current 1-60 Past Due 61+ Past Due 1,000 1,000 1,500 1,500 A B D E 800 800 2,000 2,000 500 500 Total: 5,800 2,800 1,000 2,000