Bradford Plumbing had the following data for a recent year:
Credit sales ............................................................ $547,900
Allowance for doubtful accounts, 1/1 (a credit balance) ............ 8,740
Accounts receivable, 1/1 ............................................... 42,340
Collections on account receivable .................................. 489,770
Accounts receivable written off ...................................... 14,250
Bradford estimates that 2.7% of credit sales will eventually default.
Required:
1. Compute bad debt expense for the year (rounding to the nearest whole number).
2. Determine the ending balances in accounts receivable and allowance for doubtful accounts?