A company has the following unadjusted account balances at December 31, of the current year; Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance). The company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year-end: 
1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet.
2. Prepare the adjusting journal entry to record bad debts expense for the current year.
Definitions:
Prospectively
Prospectively means looking forward or considering future events, often used in accounting in terms of adopting new policies for future transactions.
LIFO Reserve
The difference between the cost of inventory calculated under the Last In, First Out (LIFO) method and another inventory costing method like First In, First Out (FIFO).
Deferred Taxes
Taxes that are owed but not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.
Retrospective Adjustment
A change applied to the accounting records of prior periods to correct an error or implement a change in accounting principle.
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