E8-3 (Algo) Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method [LO 8-2] During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $165,000, of which $82,500 was on credit At the start of 2021, Accounts Recelvable showed a $12,000 debit balance and the Allowance for Doubtful Accounts showed a $590 credit balance. Collections of accounts receivable during 2021 amounted to $67,000. Data during 2021 follow: a. On December 10 , a customer balance of $1,450 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: 1. 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. 3. On the basis of the data available, does the 2 percent rate appear to be reasonable? Record the write-off of a certain customer account from a prior year which is not collectible totaling $1,450. Note: Enter debits before credits. Record the estimated bad debt losses at 2 percent of credit sales for the year. Note: Enter debits before credits. Show how the amounts related to Bad Debt Expense would be reported on the income stat \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Kelly's Camera Shop } \\ \hline Balance Sheet (partial) \\ \hline At December 31, 2021 \\ \hline Current Assets & \\ \hline & \\ \hline & \\ \hline & \\ \hline \end{tabular} On the basis of the data available, does the 2 percent rate appear to be reasonabl