Discounts and Doubtful Items Ey, a major pharmaceutical company, includes the following in its 2002 balance sheet ($ amounts in millions): Accounts receivable (net of allowances of $66.4): $1,670.3. 1. Compute the ratio of the allowance for doubtful items to gross accounts receivable for December 31, 2002. In 1995, this ratio was 3.5%, and it was 3.2% in 1998. What are some possible reasons for the changes in this ratio? 2. Independent of the actual balances, prepare a journal entry to write off an uncollectible account of $100,000 on January 2, 2003.