Bradford Plumbing had the following data for a recent year:
Credit sales .............................................................$289,000
Allowance for doubtful accounts, 1/1 (a credit balance) ......... 4,120
Accounts receivable, 1/1 .............................................. 38,700
Collections on account receivable .................................... 291,000
Accounts receivable written off ....................................... 4,620
Bradford estimates that 2.2 percent of credit sales will eventually default.
Required:
1. Compute bad debt expense for the year.
2. Determine the ending balances in accounts receivable and allowance for doubtful accounts.