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:

Year ...................Sales.......... Allowance for Bad Debts End-of-Year Credit Balance

2010 . . . . . . . . $3,000,000.................................................................... $ 44,600

2011 . . . . . . . . 2,850,000...................................................................... 61,600

2012 . . . . . . ... 3,600,000...................................................................... 82,800

2013 . . . . . . . . .3,940,000..................................................................... 123,000

1. Compute the amount of accounts written off for the years 2011, 2012, and 2013.

2. The external auditors are concerned with the growing amount in the allowance account. What action do you recommend the auditors take?