Jackson, Inc. makes sales of its products and services and extends credit to its customers. Base tern are 2/15, n30 (2% discount if paid within 15 days or the net is due within 30 days). The credit is unsecured and the potential exposure is equal to the ending 2019 Accounts Receivable balance.

Default probability is calculated by taking a rolling 5-year average of the write-off percentage (writ offs/ending Accounts Receivable). The recovery percentage used is 45%.

\begin{tabular}{ccc} Year & Accounts Receivable & Write-offs \\ 2015 & $1,425,000 & $30,000 \\ 2016 & 1,545,985 & 32,987 \\ 2017 & 1,298,113 & 29,458 \\ 2018 & 1,681,557 & 33,451 \\ 2019 & 1,900,254 & 35,877 \end{tabular}