Peru Industries began operations on January 1, 2014. During the next two years, the company completed a number of transactions involving credit sales, accounts receivable collections, and bad debts (assume a perpetual inventory system). These transactions are summarized as follows:
2014
a. Sold merchandise on credit for $2,250,000, terms n/30 (COGS = $ 1,240,000).
b. Wrote off uncollectible accounts receivable in the amount of $34,000.
c. Received cash of $1,330,000 in payment of outstanding accounts receivable.
d. In adjusting the accounts on December 31, concluded that 1.5% of the outstanding accounts receivable would become uncollectible.
2015
e. Sold merchandise on credit for $2,940,000, terms n/30 (COGS = $1,592,000).
f. Wrote off uncollectible accounts receivable in the amount of $53,000.
g. Received cash of $2,210,000 in payment of outstanding accounts receivable.
h. In adjusting the accounts on December 31, concluded that 1.5% of the outstanding accounts receivable would become uncollectible.
Required
Prepare journal entries to record Peru's 2014 and 2015 summarized transactions and the adjusting entries to record bad debt expense at the end of each year.