Alpha Company's Accounts Receivable and Allowance for Doubtful Accounts Balances

question 1

Essay

Alpha Company's accounts receivable and allowance for doubtful accounts balances were $100,000 and $14,000 (credit)respectively,at the beginning of Year 2.During Year 2,a customer defaults on a $12,000 balance related to goods purchased during Year 1.By the end of the year,the company had made credit sales of $2,400,000 and collected $2,200,000 on account.It now estimates that 1% of its credit sales will default.
A) Prepare the journal entry to write-off the bad debt.
B) Prepare the adjusting entry to record bad debt expense for Year 1.
C) What is the net accounts receivable balance at the end of the year?

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Definitions:

Capital Balance

The amount recorded in a shareholder's or partner's equity account, reflecting their investment in the business.

Full Time

Employment status characterized by working a minimum number of hours defined by the employer, typically involving benefits not offered to part-time employees.

Net Income

The net income is the final amount of profit a company makes after deducting all costs, taxes, and expenses from its total revenue.

Capital Balances

The amount of money that owners have invested in a firm plus any retained earnings or minus any losses.