The Gadzooks Chip Company offers credit terms to its customers. At the end of 2009, accounts receivable totaled $2,223,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $68,000 at the beginning of 2009 and $46,200 in receivables was written off during the year as uncollectible. No previously written off receivables were collected. The company estimates bad debts by applying a percentage of 3% to accounts receivable at the end of the year.
1. Prepare journal entries to record the write-off of receivables and the year-end adjusting entry for bad debt expense.
2. How would accounts receivable be shown in the 2009 year-end balance sheet?