Winterfell Inc. has annual sales of $250,000, all on credit. Sales have not increased a material amount over the past 3 years. Two years ago, Winterfell Inc. wrote off $3,750 and in the last year, they only wrote off $3,250. Both years, they used the direct write off method. For this scenario, determine whether Winterfell Inc. should continue using the direct write off method or if they should switch to the percentage of the sales allowance method. Justify your response by using GAAP principles.
Winterfell Inc. has annual sales of $250000 all on credit
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