E7-8Estimate Bad Debts from Receivable Balances

The following information is extracted from the accounting records of the Shelton Corporation at the beginning of 2010:

Accounts Receivable$63,000

Allowance for Doubtful Accounts1,400 (credit)

During 2010, sales on credit amounted to $575,000, 557,400 was collected on outstanding receivables, and $2,600 of receivable were written off as uncollectable. On December 31, 2010.Shelton estimates it bad debts to be 4% of the outstanding gross accounts receivable balance.

Required

1.Prepare the journal entry necessary to record Shelton estimate of bad debt expense for 2010

2.Prepare the Accounts Receivable section of Shelton's December 2010 balance sheet.

3.Compute Shelton's receivable turnover.

If Shelton Company uses the IRFA, what might be the heading be for the accounts receivable section in requirement 2?