Wilder Company has accounts receivable of $130,000 at March 31. An analysis of the accounts shows the following.

Month of Sale Balance, March 31

March $80,000

February 27,600

January 14,500

Prior to January 7,900

$130,000

Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,700 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. Wilder estimates that 8% of accounts receivable will become uncollectible. The company is considering using the estimate of bad debts shown below.

Estimated Percentage

Age of Accounts Uncollectible

130 days 2.0%

3160 days 5.0%

6190 days 30.0%

Over 90 days 50.0%

Instructions:

(a) Prepare the adjusting entry at March 31 to record bad debt expense, assuming that the 8% estimate is used.

(b) Prepare the adjusting entry at March 31 to record bad debt expense, assuming the aging schedule is used.

(c) Compare the two approaches used above.