The Pronghorn Corp. 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. However, the number of customers taking the full 30 days to pay has increased within the last year. It now appears that fewer than 60% of the customers are taking the discount. Bad debts as a percentage of gross credit sales have risen from the 1.5% of past years to about 4% in the current year. The controller responded to a request for more information on the deterioration in collections of accounts receivable by preparing the following report:

Pronghorn Corp. Finance Committee ReportAccounts Receivable Collections May 31, 2017

The fact that some credit accounts will prove uncollectible is normal. Annual bad debt write offs have been 1.5% of gross credit sales over the past five years. During the last fiscal year, this percentage increased to slightly less than 4%. The current Accounts Receivable balance is $1.8 million. The condition of this balance in terms of age and probability of collection is as follows:

	Proportion of Total (%)		Age Categories		Probability of Collection (%)
	68		not yet due		99
	16		less than 30 days past due		96
	7		30 to 60 days past due		93
	5		61 to 120 days past due		92
	2.5		121 to 180 days past due		71
	1.5		more than 180 days past due		20

Allowance for Doubtful Accounts had a credit balance of $45,400 on June 1, 2016. The Pronghorn Corp. has provided for a monthly bad debt expense accrual during the current fiscal year based on the assumption that 4% of gross credit sales will be uncollectible. Total gross credit sales for the 201617 fiscal year amounted to $3.94 million. Write offs of bad accounts during the year totalled $148,500.\

Calculate the amount of the year-end adjustment that is needed to bring Allowance for Doubtful Accounts to the balance indicated by the aging analysis Additional allowance needed Prepare the necessary journal entry to adjust the accounting records. (Credit account titles are automatically indented when amount is entered. amounts.) Account Titles and Explanation Debit Credit