The 2008 audit of the accounting records of the Lane Company discloses the following information:

Required
1. Reconstruct the journal entries that were made by Lane during 2008 to record changes in the following accounts, assuming sales returns and allowances are estimated in the period of sale and the net price method is used to account for sales discounts.
a. Allowance for doubtful accounts
b. Allowance for sales returns and allowances
c. Accounts receivable
2. What is the 2008 ending balance in each of the accounts in Requirement 1 and how will it be reported on Lane€™s 2008 financialstatements?

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2007 2008 Accounts receivable (ending) Allowance for doubtful accounts (ending) Allowance for sales returns and allowances (ending) Gross sales returns and allowances (estimated for the year) Accounts receivable written off during the year Estimated bad debts for the year Actual gross sales returns and allowances for the year Sales discounts not Credit sales during the year (terms, 2/10, n/60) Cash collected on accounts receivable during the year (net of discounts taken) 352,000 $186,000 $187,100 7,000 3,916 5,200 7,900 7,500 6,000 400 375,000 380,000 367,500 7,400 4,700 4,900 6,800 7,200 4,700 0 taken at end of year