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 $160,000, of which $80,000 was on credit. At the start of 2021, Accounts Receivable showed a $10,000 debit balance and the Allowance for Doubtful Accounts showed a $580 credit balance. Collections of accounts receivable during 2021 amounted to $66,000. Data during 2021 follow: a. On December 10, a customer balance of $1,400 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? Req 1 Req 2A Req 2B Req3 Give the required journal entries for the two events in December. (If no entry is required for a transact Required" in the first account field.) View transaction list Journal entry worksheet 1 2 > Record the write-off of a certain customer account from a prior year which is not collectible totaling $1,400. Note: Enter debits before credits. General Journal Debit Credit Date December 10, 2021 Record entry Clear entry View general Journal Req 1 Req 2A Req 2B Req3 Give the required journal entries for the two events in December. (If no entry is required for a transa Required" in the first account field.) View transaction list Journal entry worksheet Record the estimated bad debt losses at 2 percent of credit sales for the year. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021 Record entry Clear entry View general Journal Req 1 Req 2A Req 2B Req3 Show how the amounts related to Bad Debt Expense would be rep Kelly's Camera Shop Income Statement (partial) Year ending December 31, 2021 Operating Expenses: Req 1 Reg 2A Req 2B Req3 Show how the amounts related to Accounts Receivable would be Kelly's Camera Shop Balance Sheet (partial) At December 31, 2021 Current Assets Reg 1 Req 2A Req 2B Req3 On the basis of the data available, does the 2 percent rate appear Does the 2 percent rate appear to be reasonable
