Bad Debt Allowance Myrick Appliance had sales of $1,000,000 during 20X8, including $600,000 of sales on credit. Balances on December 31, 20X7, were Accounts Receivable, $90,000, and Allowance for Bad Debts, $8,000. Data for 20X8: collections on accounts receivable were $560,000. Bad debts expense was estimated at 2% of credit sales, as in previous years. Write-offs of bad debts during 20X8 were $10,000. 1. Prepare journal entries concerning the preceding information for 20X8. 2. Show the ending balances of the balance sheet accounts, December 31, 20X8.

3. Based on the given data, would you advise Alice Myrick, the president of the store, that the 2% estimated bad debt rate appears adequate?