Sheridan sells office equipment and supplies to many organizations in the city and surrounding 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 indications 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 2.7% provided in past years to about 5.3% in the current year.

The companys Finance Committee has requested more information on the collections of accounts receivable. The controller responded to this request with the report reproduced below.

The fact that some credit accounts will prove uncollectible is normal. Annual bad debt write-offs have been 2.7% of gross credit sales over the past 5 years. During the last fiscal year, this percentage increased to slightly less than 5.3%. The current Accounts Receivable balance is $1,200,000. The condition of this balance in terms of age and probability of collection is as follows.

Allowance for Doubtful Accounts had a credit balance of $27,500 on June 1, 2019. Sheridan has provided for a monthly bad debt expense accrual during the current fiscal year based on the assumption that 5.3% of gross credit sales will be uncollectible. Total gross credit sales for the 20192020 fiscal year amounted to $2,500,000. Write-offs of bad accounts during the year totaled $112,000.

1. Compute the amount of the year-end adjustment necessary to bring Allowance for Doubtful Accounts to the balance indicated by the age analysis.
2. Prepare the necessary journal entry to adjust the accounting records. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Please help me for both question. (Q1 and Q2)

SHERIDAN COMPANY Accounts Receivable Collections May 31, 2020 Proportion of Total Age Categories Probability of Collection 60% 98% 22% 96% 9% 94% not yet due less than 30 days past due 30 to 60 days past due 61 to 120 days past due 121 to 180 days past due over 180 days past due 5% 91% 212% 75% 112% 30% SHERIDAN COMPANY Accounts Receivable Aging Schedule May 31, 2020 Proportion Amount Probability of in of Non- Total Category Collection Estimated Uncollectible Amount Age Categories Not yet due 0.60 720000 0.02 14400 $1 Less than 30 days past due 0.22 264000 0.04 10560 30 to 60 days past due 0.09 108000 0.06 6480 61 to 120 days past due 0.05 60000 0.09 5400 121 to 180 days past due 0.025 30000 0.25 7500 X Over 180 days past due 0.015 18000 0.70 12600 Total 1200000 56,940 1- Compute the amount of the year-end adjustment necessary to bring Allowance for Doubtful Accounts to the balance indicated by the age analysis. 2- Prepare the necessary journal entry to adjust the accounting records. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)