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INSTRUCTIONS: Please read carefully! Failure to follow these instructions will lead to lost points! To receive full credit, the following are required: Numerical answers are correct Journal entries are formatted correctly For each question, clearly identify the final answer. If I cannot determine which value is the final answer or if the writing is illegible, the question will not receive any points.

2. (8 pts) Braintree Company sells its products to customers on a credit basis. The 2021 balance sheet shows Accounts Receivable of $522,000 and Allowance for Uncollectible Accounts of $40,000. During 2021, credit sales were $1,800,000, cash collections from customers $1,880,000, and $45,000 in accounts receivable were written off. In addition, $4,000 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following:

Age Group	Accounts Receivable in Age Group	Percent Uncollectible
060 days	238,200	3%
6190 days	39,700	5%
91120 days	79,400	25%
Over 120 days	39,700	45%

a. (4 pts) Under the Allowance Method, how does the process for estimating bad debt expense differ between the income statement and balance sheet approach?

b. (2 pts) Prepare the year-end adjusting entry for bad debts assuming bad debt expense is estimated to be 2% of credit sales for the year (income statement approach).

c. (2 pts) Prepare the year-end adjusting entry for bad debts assuming the desired ending balance in allowance for uncollectible accounts is determined by the aging schedule provided above (balance sheet approach).

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