A company uses the aging of accounts receivable method to estimate its bad debts expense. On December 31 of the current year an aging analysis of accounts receivable revealed the following:

         Accounts                                                                        Estimated

      Receivable               Account Age                                    Uncollectible

         $620,000               Not due yet…………..                          1%

           270,000               1-30 days overdue…..                            2%

           145,000               31-60 days overdue.                               8%

             55,000               61-90 days overdue….                         20%

             32,000               91-120 days overdue...                         50%

           18,000               Over 120 days overdue                       70%

      $1,140,000               Total

Required:

a. Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the current year-end balance sheet.

b. Calculate the amount of the Bad Debts Expense that should be reported on the current year’s income statement, assuming that the balance of the Allowance for Doubtful Accounts on January 1 of the current year was $44,000 and that accounts receivable written off during the current year totaled $42,000.