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

Accounts Receivable....................................................................... $1,240,200

Allowance for Doubtful Accounts............................................................ 29,220

Sales for the year were $8,100,000, of which 70% was on credit, and sales returns were $140,000. Cash collections, excluding recoveries, were $6,420,000. Rio had also written off $52,500. The companys credit and collection manager has estimated that 5% of outstanding accounts receivable are uncollectible.

Instructions

1. Calculate the balance in accounts receivable at December 31. Show calculations (3 marks).
2. Provide the appropriate journal entry to record the bad debt expense for the year. (3 marks)