On January 1, 2010, the balance in Tabor Co.’s Allowance for Bad Debts account was $13,400. During the first 11 months of the year, bad debts expense of $21,462 was recognized. The balance in the Allowance for Bad Debts account at November 30, 2010, was $9,763.

Required:

a. What was the total of accounts written off during the first 11 months?

b. As the result of a comprehensive analysis, it is determined that the December 31, 2010, balance of the Allowance for Bad Debts account should be $9,500. Show the adjustment required in the horizontal model or in journal entry format.

c. During a conversation with the credit manager, one of Tabor’s sales representatives learns that a $1,230 receivable from a bankrupt customer has not been written off but was considered in the determination of the appropriate year-end balance of the Allowance for Bad Debts account balance. Write a brief explanation to the sales representative explaining the effect that the write-off of this account receivable would have had on 2010 net income.