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Hampton Company sells office equipment to small and medium$-$sized business. They had a very good

year in $2019.$ They increased net sales from $ $4,000,000$ in $2018$ to $ $5,200,000$ in $2019.$ In $2018,$ Hampton

made $ $1,700,000$ of their sales on credit, and had an A$/$R turnover of $3\mathrm{.}6.$ In $2019,$ they made $ $2,900,000$

of their sales on credit. In $2017,$ they implemented a new strategy that included selling to customers with

weaker credit and extending payment terms on their receivables. Because of this increased risk, they

required a larger number of new customers to sign written payment agreements, but they have not changed

their estimates of uncollectible accounts since $2015.$ Below is an accounts receivable aging schedule for

the end of $2018$ and the end of $2019$:

$2018$ Accounts Receivable Aging Schedule

$\%$ Estimated

Age Amount Uncollectible

Under $30$ days $ $675,0003\%$

$30-60$ days $ $443,0009\%$

$60-90$ days $ $98,00020\%$

Over $90$ days $ $45,00050\%$

$2019$ Accounts Receivable Aging Schedule

$\%$ Estimated

Age Amount Uncollectible

Under $30$ days $ $1,200,0003\%$

$30-60$ days $ $680,0009\%$

$60-90$ days $ $127,00020\%$

Over $90$ days $ $51,00050\%$

Hampton uses the percentage of receivables method to determine net realizable value of their receivables.

During the course of $2019$ they wrote$-$off $$14,000$ in receivables. Please answer the following questions:

A$.$ Please record the journal entry to adjust Allowance for Doubtful Accounts at $12/31/19.$ The

allowance has not been adjusted since $12/31/18.$

B$.$ Please calculate the Accounts Receivable turnover as of $12/31/19.$

C$.$ If you were auditing Hampton Co$,$ would you agree that their ending balance in the Allowance for

Doubtful Accounts is acceptable? In paragraph form, please state your conclusion and give at least

two reasons for your answer. If it is not appropriate, what should Hampton change?

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