Problem 7-4B Accounts receivable transactions and bad debts adjustments C1 P2 P3 Sherman Co. began operations in Year 1. During its first two years, the company completed several transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $685,350 of merchandise on credit (that had cost $500,000), terms n/30. b. Received $482,300 cash in payment of accounts receivable. c. Wrote off $9,350 of uncollectible accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 1% of accounts receivable would be uncollectible. Check (d) Dr. Bad Debts Expense, $11,287 Year 2 c. Sold $870,220 of merchandise on credit (that had cost $650,000), terms n30. f. Received $990,800 cash in payment of accounts receivable. g. Wrote off $11,090 of uncollectible accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 1% of accounts receivable would be uncollectible. (h) Dr. Bad Debts Expense, $9,773 Required Prepare journal entries to record Sherman's summarized transactions and its year-end adjusting entries to record bad debts expense. (The company uses the perpetual inventory system, and it applies the allowance method for its accounts receivable.)