During the year ended December 31, 2021, Kellys Camera Shop had sales revenue of $220,000, of which $110,000 was on credit. At the start of 2021, Accounts Receivable showed a $11,000 debit balance and the Allowance for Doubtful Accounts showed a $700 credit balance. Collections of accounts receivable during 2021 amounted to $78,000.

Data during 2021 follow:

1. On December 10, a customer balance of $2,000 from a prior year was determined to be uncollectible, so it was written off.
2. 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:

1. 1. Give the required journal entries for the two events in December.
2. 2-a. Show how the amounts related to Bad Debt Expense would be reported on the income statement.
3. 2-b. Show how the amounts related to Accounts Receivable would be reported on the balance sheet.
4. 3. On the basis of the data available, does the 2 percent rate appear to be reasonable?