You have just been hired as the new controller of Slytherin Inc., replacing the previous controller who was apparently turned into a weasel.

Slytherins accounts receivable balance at the end of December, 2015, was $800,000. Slytherin had net sales of $9,540,000, of which $1,200,000 were for cash and the remainder were on credit. Slytherins allowance for doubtful accounts had a debit balance of $4,000 on December 31, before any year-end adjustment was made. In prior years, Slytherin had used the percentage-of-credit-sales approach to estimating bad debts expense (at 0.4%). However, for the 2015 year, Slytherin decided to accept the recommendation of its auditors (Cornelius & Fudge) and switch to the aging-of-receivables approach. Accordingly, before his transformation, the prior controller had prepared the following table:

Amount	Age	Estimated % Uncollectible
650,000	Under 30 days	1%
100,000	31-60	10%
50,000	61+ days	30%

The CEO of Slytherin would like to know what bad debts expense would be under both approaches. Calculate:

1. Bad debts expense using the percentage-of-sales approach
2. Bad debts expense using the aging-of-receivables approach

The CEO also believes that there has been a mistake, because allowance of doubtful account (AFDA) currently has a debit balance. Explain what a debit balance in AFDA could indicate.