At the end of last year, the company had $654,000 in outstanding Accounts Receivable and a credit balance for Allowance for Doubtful Account of $32,400. During the current fiscal year, the company reported the following:
1. service revenue of $1,240,000 was billed to customers on account.
2. $1,250,000 was collected on customers’ accounts receivable.
3. The company wrote off $42,100 in accounts receivable.
4. The company collected $2,300 of previously written off accounts receivable.
5. The company uses the percentage of receivables to estimate bad debts expense. Based on experience, uncollectible accounts are expected to be 4% of accounts receivable.
a) prepare the journal entries to write-off of accounts receivable and the collection of the previously written off account during the year.
b) prepare the current year-end adjusting entry to record bad debt expense.
c) prepare the accounts receivable section of the balance sheet for the current year end in classified format.