International Company handles the advertising and promotion of various clients all on credit term of 180 days. Its unadjusted trial balance on December 31, 2009, end of its first year of operation, showed among others: Account Receivable, 1, 250, 000 and professional fees, 4,560,000. As it was only its first year of operation, management decided to forego recording of bad debts. Among its transactions for the year 2010 are the following:

a) Professional services rendered on account, 5,500,000

b) Total Collection of previous and current accounts, 3,500,000. The Accountant adopted a policy of providing for doubtful accounts based on 3% of the outstanding accounts receivable at the end of the year Required a. Entries to record the transactions for 2010.

b. Make three T accounts for Account Receivable, Allowance for Doubtful Accounts and Doubtful Account Expense. Post the T accounts the entries made in requirement a.)

c. Entry to adjust for doubtful accounts on December 31, 2010.

d. Post the adjusting entry made in c.) What was the net realizable value of the account receivable?

e. How much was the doubtful account expense in the income statement?