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During the year ended December 3 1 , 2 0 2 1 , Kelly's Camera Shop had sales revenue of $ 1 7 5 ,

During the year ended December 31,2021, Kelly's Camera Shop had sales revenue of $175,000, of which $87,500 was on credit. At
the start of 2021, Accounts Receivable showed a $11,000 debit balance and the Allowance for Doubtful Accounts showed a $610
credit balance. Collections of accounts receivable during 2021 amounted to $69,000.
Data during 2021 follow:
a. On December 10, a customer balance of $1,550 from a prior year was determined to be uncollectible, so it was written off.
b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit
sales for the year.
Required:
Give the required journal entries for the two events in December.
2-a. Show how the amounts related to Bad Debt Expense would be reported on the income statement.
2-b. Show how the amounts related to Accounts Receivable would be reported on the balance sheet.
On the basis of the data available, does the 2 percent rate appear to be reasonable?
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