Pachel Corporation reports the following information pertaining to its accounts receivable. Days Pas

Pachel Corporation reports the following information pertaining to its accounts receivable.

Days Past Due Current 1–30 31–60 61–90 Over 90 $60,000 $40,000 $25,000 $12,000 $2,000

The company’s credit department provided the following estimates regarding the percent of accounts expected to eventually be written off from each category listed. Current receivables outstanding 2 % Receivables 1–30 days past due 4 Receivables 31–60 days past due 16 Receivables 61–90 days past due 40 Receivables over 90 days past due 90

The company uses a balance sheet approach to estimate credit losses.

a. Record the company’s uncollectible accounts expense, assuming it has a $1,400 credit balance in its Allowance for Doubtful Accounts prior to making the necessary adjustment.

b. Record the company’s uncollectible accounts expense, assuming it has a $1,600 debit balance in its Allowance for Doubtful Accounts prior to making the necessary adjustment.