The following trial balance was prepared for Tile, Etcetera, Incorporated, on December 31, Year 1, after the closing entries were posted. Account Title Debit Credit Cash Accounts receivable $110,000 125,000 Allowance for doubtful accounts $18,000 Inventory 425,000 Accounts payable 95,000 Common stock 450,000 Retained earnings 97,000 Totals $660,000 $660,000 Tile, Etcetera had the following transactions in Year 2 1. Purchased merchandise on account for $580,000. 2. Sold merchandise that cost $420,000 for $890,000 on account. 3. Sold for $245,000 cash merchandise that had cost $160,000. 4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee. 5. Collected $620,000 cash from accounts receivable. 6. Paid $610,000 cash on accounts payable. 7. Paid $145,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4). 9. Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity. 10. Wrote off $7,500 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9). Required a. Prepare general journal entries for these transactions, and post the entries to T-accounts. Also, prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for Year 2 b. Compute the net realizable value of accounts receivable at December 31, Year 2. c. If Tile, Etcetera used the direct write-off method, what amount of uncollectible accounts expense would it report on the income statement?