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You have recently landed a job in the Accounting Department of a public company listed on...

You have recently landed a job in the Accounting Department of a public company listed on the NASDAQ exchange. You have been asked to prepare year-end adjusting entries, including an appropriate adjustment to the Allowance for Doubtful Accounts. According to the Aged Accounts Receivable analysis, the Allowance should be $200,000. After showing your analysis to your supervisor, he tells you to change the age category of a $400,000 customer balance from "120 days past due" to "Current", and to prepare a new invoice to that customer with a date that places it within the "Current" category. (1) What would be the effect of this change on the Income Statement and Balance Sheet? (2) What action should you take?

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