Reference no: EM13483282

Technology Company, which operates a chain of 30 electronics supply stores, has just completed its fourth year of operations. The direct write-off method of recording bad debt expenses has been used during the entire period. Because of substantial 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 as annual provision of 1/2% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts woiuld have been at the end of each year.