The data in the following schedule pertain to the first 8 years of the Gordon Company's credit sales and experiences with uncollectible accounts.

Gordon Company has not previously used an Allowance for Uncollectible Accounts but has merely charged accounts written off directly to Uncollectible Accounts Expense.
What percentage of credit sales for a year would you recommend that Gordon Company charge to the sales adjustment account if one were to be set up at the end of year 8 ?

Transcribed Image Text:

Related Related Credit Uncollectible Credit Uncollectible Year Sales Accounts Year 1 $100,000 $2,550 2 150,000 3,225 3 200,000 3,725 4 225,000 4,000 5698o Sales $250,000 Accounts $3,000 275,000 2,700 7 280,000 2,875 290,000 2,925