Wildhorse Company uses the percentage of sales approach to record bad debt expense for its monthly financial statements and the percentage of receivables approach for its year-end financial statements. Wildhorse Company has an October 31 fiscal year end, closes temporary accounts annually, and uses a perpetual inventory system. Wildhorse Company has no stated return policy On August 31, 2021, after completing its month-end adjustments, it had accounts receivable of $70,000, a credit balance of $2,800 in Allowance for Doubtful Accounts, and bad debt expense of $9,300. In September and October, the following occurred: September 1. 2. Sold $52.900 of merchandise on account the cost of the merchandise was $23,805 A total of $800 of the merchandise sold on account was returned. The customers were issued credit memos. The cost of the merchandise was $400 and it was returned to inventory. Collected $55.600 cash on account from customers. 3. 4. Interest charges of $700 were charged to outstanding accounts receivable. 5 As part of the month-end adjusting entries, recorded bad debt expense of 2% of credit sales for the month. October 1. 2. 3. Credit sales in the month were $60,100; the cost of the merchandise was $27,000. Received $330 cash from a customer whose account had been written off in July Collected $55,000 cash, in addition to the cash collected in transaction 2. above, from customers on account. Wrote off $7,100 of accounts receivable as uncollectible. Interest charges of $700 were charged to outstanding accounts receivable. Recorded the year-end adjustment for bad debts. Uncollectible accounts were estimated to be 4% of accounts receivable. 4. 5. 6