College Point Company sells its products to customers on a credit basis. An adjusting entry for
bad debt expense is recorded only on December 31, the company's fiscal year-end. The 2021
balance sheet disclosed the following:
Current assets:
Accounts Receivable (net of allowance for doubtful accounts of $92,000): $1,748,000
During 2021, credit sales were $18,135,000, cash collections from customers $17,850,000, and
$98,000 in accounts receivable were written off. In addition, $2,300 was collected from a
customer whose account was written off in 2020.
Required
1. Prepare summary journal entries to account for all of the receivable transactions during 2021.
2. Prepare the year-end adjusting entry for bad debts assuming the allowance for doubtful
accounts is estimated to be 5% of the year-end balance in accounts receivable.
