In its 2011 financial report, Sound Unlimited reported the following items:

1. A credit balance of $200,000 in allowance for doubtful accounts.

2. A debit balance of $7,500,000 in accounts receivable.

3. Sales of $3,250,000.

During 2011, the company was involved in the following transactions that affected allowance for doubtful accounts.

1. Wrote off accounts considered uncollectible totaling $195,000.

2. Recovered $45,000 that had previously been written off.

Assume that historically 5 percent of sales has proven to be uncollectible.

a. Compute the December 31, 2010, balance in allowance for doubtful accounts.

b. Assume that all sales were on credit and cash collections from customers during 2011 totaled $4, 200,000. Compute the 12/31/10 balance in accounts receivable.