The December $31,2009$ balance sheet of Sauder Company had Accounts Receivable of $$500,000$ and a credit balance in Allowance for Doubtful Accounts of $$33,000.$ During $2010,$ the following transactions occurred: sales on account $$1,400,000$; sales returns and allowances, $$50,000$; collections from customers, $$1,150,000$; accounts written off $$35,000$; previously written off accounts of $$5,000$ were collected.

Instructions

$($a$)$ Journalize the $2010$ transactions.

$($b$)$ If the company uses the percentage of sales basis to estimate bad debts expense and anticipates $2\%$ of net sales to be uncollectible, what is the adjusting entry at December $31,2010?$

$($c$)$ If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be $4\%$ of accounts receivable, what is the adjusting entry at December $31,2010?$

$($d$)$ Which basis would produce a higher net income for $2010$ and by how much?