BAD DEBT EXPENSE: PERCENTAGE OF CREDIT SALES METHOD Bradford Plumbing had the following data for a recent year:

Credit sales $289,000 Allowance for doubtful accounts, 1/1 (a credit balance) 4,120 Accounts receivable, 1/1 38,700 Collections on account receivable 291,000 Accounts receivable written off 4,620 Bradford estimates that 2.2 percent of credit sales will eventually default.

Required:

. Compute bad debt expense for the year.

. Determine the ending balances in accounts receivable and allowance for doubtful accounts.

Exercise