Q:

On January 1 of the current year, the ledger of K. Lane shows the allowance for bad debts account with a credit balance of $ 2,750. This company uses the net sales method of accounting for bad debts. During the current year, the following transactions affecting bad debts and uncollectible accounts occurred. set up an allowance for bad debts account, and post specifically to this account only.

Mar 2 Received word that Lennox Co., a customer, had been declared bankrupt, owing K lane $ 2614

Mar 14 Received a check from H. Patterson, whose account had been written off in the preceding year for the amount of $265

July 3 Determined that the account of T. Minor, a deceased customer, who owed $2,460, was collectible only to the extent of 60%. We wrote off the uncollectible partof the receivable

Sept. 9 Received $783 from Lennox Co. as final settlement of its indebtedness to use. (Refer to transaction of Mar. 2.)

Dec. 31 Recorded the adjusting entry to recognize bad debts by taking 1.5% of the balance in net sales ($205,600)