A company started the year with accounts receivable of $30,000 and an allowance for uncollectible accounts of $(3,500). During the year, sales (all on account) were $90,000 and cash collections for sales amounted to $82,000. Also, $3,400 worth of uncollectible accounts were specifically identified and written off. Then, at year end, the company estimated that 2% of ending accounts receivable would be uncollectible.
1. Record the transactions (including beginning balances) into the accounting equation.
2. What amount will be shown on the year-end income statement for bad debts expense?
3. What is the balance in the allowance for uncollectible accounts after all adjustments have been made?