The Transtech Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of all new sales. Sales for 4 consecutive years and year-end allowance account balances were as follows:

1. Compute the amount of accoums written off for the years 2000, 2001 , and 2002.
2. The external auditors are concerned with the growing amount in the allowance account. What action do you recommend the auditors take?

Transcribed Image Text:

Year 1999 2000 2001 Sales Allowance for Bad Debts End-of-Year Credit Balance $2,100,000 $21,500 1,975,000 35,500 2,500,000 50,000 2002 2,350,000 66,000