Fife Company has the following account balances at December 31 of the current year: Accounts Receivable $42,400 and Allowance for Doubtful Accounts $1,600 (credit balance).Fife uses the aging of accounts receivable to estimate bad debts.The following aging schedule reflects the situation at year-end: 
(1)Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31,current year,balance sheet.
(2)Prepare the journal entry to record bad debts expense for the current year.
Definitions:
Natural Monopoly
A market condition where a single supplier is most efficient in producing a good or service due to high initial costs and substantial economies of scale.
Marginal Cost
The augmentation in cumulative costs linked with generating an extra unit of a product or service.
Average Cost
The overall expense of manufacturing split by the quantity of units made.
Rate of Return
The increase or decrease in value of an investment throughout a determined period, shown as a percent of the investment’s initial cost.
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