Brecha Hogan is president of Hogan Company, a manufacturer of toys for children. For the past 10 years, the company has sold its product to both wholesale and retail dealers of toys in the northeast United States. Over the years, the company has come to know its customers well. While all sales are made on credit, few credit losses have occurred. The companys experience has shown that an annual provision for uncollectible accounts of 0.3 of 1 percent of sales is adequate in the old territory. Early in 20X1, Hogan Company decided to expand and develop a new sales base in the southeastern United States. Hogan was pleased when credit sales of $950,000 were achieved in the new territory during the year. To achieve this level of sales and get a foothold in the new territory, though, credit was allowed to some customers with lower credit ratings than had been granted in the past. Given its liberal credit policies in the new territory Hogan estimates that the provision in the new territory should be 4% above actual first year's losses in the initial period of development. The credit losses connected with sales in the southeast became apparent by the end of 20X1. The following losses from new territory customers had been identified before year-end: On September 30, it was determined that nothing could be collected from Bedford Toy Outlets, which owed Hogan $95,500. The account was written off. On December 10, another new customer, Forever Young Fun Shops, which owed Hogan $235,000, entered receivership. On that date Hogan was offered, and accepted, a check for $125,000 in final settlement of the debt. The balance was charged off. On December 18, Technology Toys went out of business, and no collection of the $34,300 owed Hogan is anticipated. The account was charged off. The following additional information about the old and new territory became available on December 31: Sales in the old territory totaled $25,270,000 in 20X1. Sales in the new territory totaled $950,000 in 20X1. Accounts receivable of $97,900 attributed to customers in the old sales territory were determined to be uncollectible and were written off.

Required: Record in general journal entries the transactions described above for Hogan Company. All sales are on account. Use the date of December 31 to make the entry to summarize sales for the year in the old territory and new territory. Give the journal entries to record the write-off of accounts in the new territory. Give the journal entry to record the write-off of accounts in the old territory. Give the entry on December 31 to record uncollectible accounts expense for 20X1 for both territories. Make the calculation using the percentages developed by Hogan. Assume that the Allowance for Doubtful Accounts had a credit balance of $32,300 on September 30 before any of the above entries were made. Calculate the balance in the allowance account after all of the above entries have been posted. Analyze: Based on actual losses experienced by Hogan in the new territory are the credit granting policies for the new territory too liberal?