Hawthorne Manufacturing Company started operations in 2021. It had sales of $1,200,000 and collections of $895,000, leaving a balance of $305,000 in accounts receivable as of December 31, 2021. Accounts Receivable 1/1/2021 0 Sales 1,200,000 Collections 895,000 12/31/2021 305,000 Recognizing allowance for uncollectible accounts At the end of 2021, Hawthorne's analysis indicates it expects to collect $280,000 of its accounts receivable, so it must establish an allowance for uncollectible accounts of $25,000 ($305,000 - 280.000) Journal Entry Debit Credit Bad debt expense 25,000 Allowance for uncollectible accounts 25,000 Allowance for Uncollectible Accounts 1/1/2021 0 Bad debt expense 25,000 12/31/2021 25,000 07-37 Allowance Method (cont. 3) When accounts are deemed uncollectible. On April 24, 2022, Hawthorne concludes that it will not collect a $15,000 account receivable from a customer that recently has gone bankrupt. Journal Entry Debit Credit Allowance for uncollectible accounts 15,000 Accounts receivable 15,000 Accounts Receivable 1/1/2022 305,000 Specific write-off 15,000 290,000 Allowance for Uncollectible Accounts 1/1/2022 25,000 Specific write-off 15,000 10,000 1. If Hawthorne uses cash basis for tax purposes, how much taxable income should it report in 2021 based solely on the information given? 2. For 2022? (ignore collections - the question gets at the effect of the write-off) 3. If Hawthorne uses the accrual basis for tax purposes, how much taxable income should it report in 2021? (hint: the answer is not the same as in the last assignment) 4. For 2022? (ignore collections - the question gets at the effect of the write-off)