Jacobian Steel Manufacturing sells bulk steel products for maritime construction

Jacobian Steel Manufacturing sells bulk steel products for maritime construction. The company has used the allowance method for estimated bad debts for several years. Specifically they estimate that 6% of credit sales will go bad each year. Over the past several years, Jacobian has seen that year-end allowance account has a debit balance before adjustment. The company wants an in-depth analyzes of bad debts and a determination as to which method to use. You have been hired to perform the study During your review of their financial records, the following data becomes available. Credit Sales Year Total Sales on credit 2010 $1,000,000 60% 2011 $1,800,000 70% 2012 $2,000,000 75% Write offs Bad debts written off Year 2010 $52,000 2011 $96,000 2012 $60,000 Allowance Balance on December 31 2005 before adiustment Year Balance $6,000 2011 $42,000 2012 $12,000 Aging of Accounts Receivable 2012 Accounts Receivable uncollectible 6% $250,000 Not due $110,000 1-30 past due 15% 31-60 $140,000 20% 61-90 $90,000 30% $40,000 60% Over 90 days Considering also using percentage of accounts receivable balance to compute estimated uncollectible for period. Jacobian considers using 12%