Vortex Watches completed the following selected transactions during 2025 and 2026: 

Requirements 

1. Journalize the transactions (omit explanations). Open T-accounts for Allowance for Bad Debts and Bad Debts Expense, assuming the accounts begin with a zero balance. Post the transactions to the two T-accounts. 

2. Assume the December 31, 2026, balance of Accounts Receivable is $135,000. Show how net accounts receivable would be reported on the balance sheet at that date.

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2025 Dec. 31 31 2026 Jan. 17 Jun. 29 Aug. 6 Dec. 31 31 31 Estimated that bad debts expense for the year was 2% of credit sales of $450,000 and recorded that amount as expense. The company uses the allowance method. Made the closing entry for bad debts expense. Sold merchandise inventory to New Orleans Jewelry, $700, on account. Ignore Cost of Goods Sold. Wrote off New Orleans Jewelry's account as uncollectible after repeated efforts to collect from the company. Received $700 from New Orleans Jewelry, along with a letter apologizing for being so late. Reinstated New Orleans Jewelry's account in full and recorded the cash receipt. Made a compound entry to write off the following accounts as uncollectible: Canada Jewels, $1,600; Vision Vintage, $1,000; and Realex Boutique, $400. Estimated that bad debts expense for the year was 2% of credit sales of $460,000 and recorded the expense. Made the closing entry for bad debts expense.