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The following trial balance was prepared for Tile, Etc., Inc., on December 31, Year 1, after the closing entries were posted:

Account Title	Debit			Credit
Cash	$	125,000
Accounts Receivable		128,000
Allowance for Doubtful Accounts				$	19,500
Inventory		431,000
Accounts Payable					98,000
Common Stock					465,000
Retained Earnings					101,500
Totals	$	684,000		$	684,000

Tile, Etc. had the following transactions in Year 2:

Purchased merchandise on account for $595,000.

Sold merchandise that cost $435,000 for $920,000 on account.

Sold for $260,000 cash merchandise that had cost $166,000.

Sold merchandise for $205,000 to credit card customers. The merchandise had cost $102,000. The credit card company charges a 3 percent fee.

Collected $650,000 cash from accounts receivable.

Paid $625,000 cash on accounts payable.

Paid $148,000 cash for selling and administrative expenses.

Collected cash for the full amount due from the credit card company (see item 4).

Loaned $75,000 to J. Parks. The note had an 6 percent interest rate and a one-year term to maturity.

Wrote off $7,800 of accounts as uncollectible.

Made the following adjusting entries:

(a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account.

(b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9).

Required a. Prepare general journal entries for these transactions; post the entries to T-accounts; and prepare an income statement, a statement of changes in stockholders equity, a balance sheet, and a statement of cash flows for Year 2. b. Compute the net realizable value of accounts receivable at December 31, Year 2. c. If Tile, Etc. used the direct write-off method, what amount of uncollectible accounts expense would it report on the income statement?

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