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Your team inquires of other HUMI personnel this month and documents the following items. COVID and the subsequent fears of a related economic recession showed

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Your team inquires of other HUMI personnel this month and documents the following items.
COVID and the subsequent fears of a related economic recession showed an increase in sales in 2021, but a sharp decline in 2022. The business rebounded well in 2023. In an effort to improve sales, HUMI extended more generous credit terms to its customers. Beginning in the fourth quarter of 2022, customers were granted an additional 30 days to pay their balances, so credit terms were extended from net 30 days to net 60 days. Days sales outstanding have increased slightly from approximately 47 days in 2022 to 61 days in 2023.
In 2022, HUMI began to sell directly to consumers using their internally developed online Sales Application. Online sales have little credit risk, as credit card companies must approve the charges before shipments are made. These sales are always settled in fewer than 30 days with no issues with bad debt. The receivables balances for Online-based sales were $8.0 million and $10.0 million in 2022 and 2023, respectively.
The allowance is estimated based on general expectations and historical losses for most accounts. The average credit score of customers in 2023 is essentially unchanged from prior years. Except for a few large customers, the receivables are due from small, homogenous customers. For customers with balances higher than $500,000, HUMI does not perform a more detailed analysis of the accounts, as historically this has not been an issue for the company. See the allowance analysis for details.
About 27.3% of the accounts receivable balance on December 31,2023, is over 91 days old.
Based on a team discussion with the Senior VP of Sales, the following is a summary of customers with balances over $500,000.
Kaboom Kanucks Company accounts receivable balance is still largely outstanding from 2022 sales. At December 31,2023 a net balance of $2.7M is still outstanding.
Earlier in the year, Kaboom Kanucks Company management agreed to reduce the balance using payments of $300,000 per month starting in August 2023. They made the first three monthly payments. This allowed HUMI to restart total sales of $200,000 in early November 2023. However, the payments due in November 2023, December 2023 and January 2024 have not yet been received, nor have any payments on the sales made in November.
Kaboom Kanucks management has not returned the credit manager's phone calls. On December 31,2023, the outstanding balance that was 31 to 60 days old was included in the allowance estimate at the same general percentage as all other receivables in this aging category across the company.
A new customer in 2021, Smacken Kraken Inc, has always paid its amounts due after selling the product to consumers. On December 31,2022, the total outstanding balance is $8.0 million. Of this, $3.0 million is over 120 days old; $2.0 million is 91 to 120 days old; and $3.0 million is 31 to 60 days old. HUMI continues to receive payments from Smacken Kracken and all amounts over 120 days old on December 31,2022 were collected in January 2023. HUMI made no
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