=+Pegasus Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-offmethod of recording bad debt expense has been used during the entire period. Because ofsubstantial increases in sales volume and the amount of uncollectible accounts, the firm is considering changing to the allowance method. Information is requested as to the effect that an annual provision of %% ofsales would have had on the amount ofbad debt expense reported for each ofthe past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The fol¬

lowing data have been obtained from the accounts:

Year Sales Uncollectible Accounts Written Off Year ofOrigin ofAccounts Receivable Written Offas Uncollectible 1st 2nd 3rd 4th 1st $ 910,000 $ 3,500 $3,500 2nd 1,064,000 4,130 2,660 $1,470 3rd 1,330,000 7,980 980 5,600 $1,400 4th 2,520,000 10,920 1,680 3,570 $5,670 Instructions