The following account balances were found for Celtics Ltd. at the beginning of its fiscal year, January 1, 2020:

Accounts Receivable....................................................................... $1,240,250

Allowance for Doubtful Accounts...................................................        (19,220)

Sales for the year were $8,100,000, of which 60% was on credit, and credit sales returns were $146,000. Cash collections were $5,416,000. In 2020, Celtics had also written off $62,500 of its accounts receivable due to probable delinquency. The company’s credit and collection manager has estimated that 6% of outstanding accounts receivable are uncollectible.

Instructions

Show all calculations and round all figures to the whole dollars:

1. Calculate the amount of the net credit sales.
2. Using the allowance method, prepare the entry recording of the accounts receivable written off in 2020.
3. Calculate the bad debt expense for the year and record the appropriate journal entry.