The accounts of Gerhard Corporation show the following:

Accounts receivable balance, January 1, 20x6--------------------------------$265,000

Allowance for doubtful accounts, January 1, 20x6 -----------------------------23,000

Total sales for the year ended December 31, 20x6 (75% on credit)-------3,450,000

Uncollectible accounts written off during 20x6-----------------------------------32,000

Recovery of previously written off accounts receivable------------------------35,000

Cash collected on account (including the above recovery)------------------2,464,000

Gerhard estimates the allowance for doubtful accounts using aging of accounts. The aging of the year-end accounts receivable balance is as follows:

Age-----------------------------------------------------Accounts Receivable------- Probability of Noncollection

Less than 30 days -------------------------------------------------?------------------------------5%

31-60 days -------------------------------------------------45,000--------------------------------10

61-90 days --------------------------------------------------32,000---------------------------------30

91+ days ----------------------------------------------------17,400---------------------------------50

Required

a) Prepare all journal entries to record all transactions above.

b) Assume now that Gerhard estimates bad debt expense as 1.5% of credit sales.

Write the journal entry to record bad debts. What will the balance in the ending allowance for doubtful accounts be at December 31, 20x6?