Hayford & Woodward, Inc. began business in January 2014. During 2014, it had credit sales of $ 29,000,000. As of December 31, 2014, it had the following balances in accounts receivable:
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Hayford & Woodward€™s auditors explained that the company will need to provide an estimate of its bad debts for the year. Hay ford & Woodward is considering the following possibilities:
1. Calculating the allowance for uncollectible accounts as a percentage of ending accounts receivable using 3, 4, 5, or 6% in the computations.
2. Calculating bad debt expense as a percentage of credit sales using 0.5, 1.0, 1.5, or 2.0% in the computations.
3. Calculating the allowance for uncollectible accounts with the aged accounts receivables method using the following percentages:
During 2015, Hayford & Woodward€™s sales of $ 30,500,000 were all on credit. Assume the 2014 allowances are unused in 2015. As of December 31, 2015, it had the following balances in accounts receivable:

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1. Which method and percentage do you think Hayford & Woodward should choose and why?
2. D o the various approaches provide significantly different account balances on the financial statements in either 2014 or 2015?

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C 1-30 Days 31-60 Days 61-90 Days Over 90 Days $400,000 $240,000 $120,000 Littleton, Inc. Pigstey Industries Snowfeld, Inc. Huskers Company Star Family Enterprises PRB. Inc TK Company 100,000 350,000 560,000 790,000 45,000 146,000 15.000 56,000 200,000 250,000 360,000 120,000 130,000 $150,000 Cu 1-30 Days 31-60 Days 61-90 Days Over 90 Days $442,000 450,000 Littleton, Inc Pigstey Industries Snowfeld, Inc. Huskers Company Star Family Enterprises PRB, Inc. TK Company $320,000 $242,000 50,000 $340,000 375,000 800,100 34,000 15,000 S310.000 402,000 11,000 100,000 250,000 42,000 55,000 55,000 32,000