BYP9-1 RLF Company sells office equipment and supplies to many organizations in the city and sur- rounding area on contract terms of 2/10, n/30. In the past, over 75% of the credit customers have taken advantage of the discount by paying within 10 days of the invoice date. The number of customers taking the full 30 days to pay has increased within the last year. Current in- dications are that less than 60% of the customers are now taking the discount. Bad debts as a percentage of gross credit sales have risen from the 2.5% provided in past years to about 4.5% in the current year. The company's Finance Committee has requested more information on the collections of accounts receivable. The controller responded to this request with the report reproduced below. RLF COMPANY Accounts Receivable Collections May 31, 2017 The fact that some credit accounts will prove uncollectible is normal. Annual bad debt write-offs have been 2.5% of gross credit sales over the past 5 years. During the last fiscal year, this percentage increased to slightly less than 4.5%. The current Accounts Receivable balance is $1,400,000. The con- dition of this balance in terms of age and probability of collection is as follows. Proportion of Total Age Categories Probability of Collection 60% not yet due 98% 22% less than 30 days past due 96% 9% 30 to 60 days past due 94% 5% 61 to 120 days past due 91% 21/2% 121 to 180 days past due 75% 1'/2%% over 180 days past due 30% Allowance for Doubtful Accounts had a credit balance of $29,500 on June 1, 2016. RLF has provided for a monthly bad debt expense accrual during the current fiscal year based on the assumption that 4.5% of gross credit sales will be uncollectible. Total gross credit sales for the 2016-2017 fiscal year amounted to $2,900,000. Write-offs of bad accounts during the year totaled $102,000. Instructions (a) Prepare an accounts receivable aging schedule for RLF Company using the age categories identi- fied in the controller's report to the Finance Committee showing the following. (1) The amount of accounts receivable outstanding for each age category and in total. (2) The estimated amount that is uncollectible for each category and in total. (b) Compute the amount of the year-end adjustment necessary to bring Allowance for Doubtful Accounts to the balance indicated by the age analysis. Then prepare the necessary journal entry to adjust the accounting records. (c) In a recessionary environment with tight credit and high interest rates: (1) Identify steps RLF Company might consider to improve the accounts receivable situation. (2) Then evaluate each step identified in terms of the risks and costs involved