**Educational Content on Accounts Receivable and Bad Debt Expense**---**Scenario Overview:**During the year ended December 31, 2018, Kelly’s Camera Shop recorded sales revenue totaling $140,000, with credit sales amounting to $70,000. At the beginning of 2018, the Accounts Receivable had a $11,000 debit balance, while the Allowance for Doubtful Accounts had a $540 credit balance. Collections on accounts receivable for 2018 totaled $62,000. The following events were noted in 2018:- **Event a:** On December 10, a customer balance of $1,200 from the previous year was deemed uncollectible and subsequently written off.- **Event b:** On December 31, the decision was made to retain the accounting policy which estimates bad debt losses at 2 percent of credit sales annually.---**Requirements:**1. **Journal Entries for December Events:** - Provide the necessary journal entries for the write-off of the uncollectible account and the year-end adjustment for bad debts. 2. **Balance Sheet and Income Statement Reporting:** - Demonstrate how Accounts Receivable and Bad Debt Expense should be presented on the 2018 balance sheet and income statement. 3. **Reasonableness of 2 Percent Rate:** - Evaluate whether the estimated 2 percent rate for bad debt losses is reasonable, based on the available data.---**Interactive Component:**- Users can click on the tabs (Req 1, Req 2A, Req 2B, Req 3) to input and verify their solutions for each requirement. "Req 2B" contains a focused question: "Does the 2 percent rate appear to be reasonable?" This invites users to analyze and determine if the estimated rate is appropriate.---This educational content provides a comprehensive case study on handling accounts receivable and managing bad debt expenses within a business setting, offering hands-on experience with financial accounting principles.

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Give the required journal entries for the two events in December. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be balance sheet and income statement for 2018. On the basis of the data available, does the 2 percent rate appear to be reasonable?

Give the required journal entries for the two events in December. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be balance sheet and income statement for 2018. On the basis of the data available, does the 2 percent rate appear to be reasonable?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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