You have just been hired as the accountant for Fan-Tastic Sports Gear, a wholesaler of sporting goods and apparel. The previous accountant left abruptly, and an accounting intern has been drafting the journal entries since January. You are examining the accounting records before finalizing the journal entries for the first quarter. Some of the accounts receivable transactions that you are reviewing follow.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Jan. 17	Sales		9,800.00
2		Bad Debt Expense			9,800.00
3	17	Bad Debt Expense		9,800.00
4		Accounts Receivable-CJs Sports			9,800.00
5	21	Cash		10,600.00
6		Bad Debt Expense		2,300.00
7		Accounts Receivable-Four Seasons Sportswear			12,900.00
8	Feb. 15	Accounts Receivable-Healthy Running		3,000.00
9		Bad Debt Expense		500.00
10		Sales			3,500.00
11	Mar. 4	Accounts Receivable-Four Seasons Sportswear		2,300.00
12		Bad Debt Expense			2,300.00
13	4	Cash		2,300.00
14		Bad Debt Expense			2,300.00
15	13	Cash		5,540.00
16		Accounts Receivable-Barbs Best Gear			5,540.00
17	31	Bad Debt Expense		20,770.00
18		Accounts Receivable-Healthy Running			5,150.00
19		Accounts Receivable-The Locker Room			4,100.00
20		Accounts Receivable-CJs Sports			2,780.00
21		Accounts Receivable-Get Your Gear			7,050.00
22		Accounts Receivable-Ready-2-Go			1,690.00

CHART OF ACCOUNTS

Fan-Tastic Sports Gear

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Healthy Running
122	Accounts Receivable-The Locker Room
123	Accounts Receivable-CJs Sports
124	Accounts Receivable-Get Your Gear
125	Accounts Receivable-Four Seasons Sportswear
126	Accounts Receivable-Ready-2-Go
127	Accounts Receivable-Barbs Best Gear
132	Notes Receivable-Fast Feet Co.
136	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Rama Gupta, Capital
311	Rama Gupta, Drawing

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Advertising Expense
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Office Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

Fan-Tastic Sports Gear recorded $2,900,000 of sales last year and projects sales to increase by $350,000 in the current year. Last year, 90% of sales were on account, with over 300 customer accounts. Bad debt expense was $26,187.

	Assume that Fan-Tastic Sports Gear used the allowance method last year, and the allowance account at the end of the year had a debit balance of $2,240. The company estimated uncollectible accounts expense using the percent of credit sales method and expected 0.75% of credit sales to be uncollectible. What is the amount of the adjusting entry to provide for doubtful accounts on December 31? Round all computations to the nearest dollar.
	How much higher (lower) would Fan-Tastic Sports Gears net income have been under the allowance method assumption in (1) than under the direct write-off method? (Enter 0 if there is no change.) by
	Using the allowance method, the net realizable value of the receivables would appear on which financial statement?