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Sunland Company 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,
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Sunland Company 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% average in past years to about 5.1% 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 following report. Sunland Company Accounts Receivable Collections May 31, 2020 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 5.1%. The current Accounts Receivable balance is $1,400,000. The condition of this balance in terms of age and probability of collection is as follows. Proportion of Total Age Categories not yet due 60% 22% less than 30 days past due 9% 30 to 60 days past due 5% 61 to 120 days past due 21% 121 to 180 days past due 1% over 180 days past due Probability of Collection 98% 96% 94% 91% 75% 30% Allowance for Doubtful Accounts had a credit balance of $29,500 on June 1, 2019. Sunland has provided for a monthly bad debt expense accrual during the current fiscal year based on the assumption that 5.1% of gross credit sales will be uncollectible. Total gross credit sales for the 2019-2020 fiscal year amounted to $2,900,000. Write-offs of bad accounts during the year totaled $115,000. (b1) Compute the amount of the year-end adjustment necessary to bring Allowance for Doubtful Accounts to the balance indicated by the age analysis. Additional allowance needed (b2) eTextbook and Media List of Accounts Save for Later Attempts: 0 of 1 used Submit Answer The parts of this question must be completed in order. This part will be available when you complete the part above![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/06/667d9b0ceb220_724667d9b0ce5f62.jpg)
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