The Intercontinental Publishing Company follows the procedure of debiting Bad Debt Expense for 2% of all new sales. Sales for four consecutive years and year-end allowance account balances were as follows:

1. Compute the amount of accounts written off for the years 2009, 2010, and 2011.
2. The external auditors are concerned with the growing amount in the allowance account. What action do you recommend the auditorstake?

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Allowance for Bad Debts End-of-Year Credit Balance Year Sales 2008 2009 2010 2011 $1,500,000 1,425.000 1,800,000 1970,000 $22,300 30,800 41.400 61,500