E8-3 (Algo) Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method [LO 8-2] During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $160,000, of which $80,000 was on credit. At the start of 2021, Accounts Receivable showed a $10,000 debit balance and the Allowance for Doubtful Accounts showed a $580 credit balance. Collections of accounts receivable during 2021 amounted to $66,000. Data during 2021 follow: a. On December 10, a customer balance of $1,400 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December 2-0. Show how the amounts related to Bad Debt Expense would be reported on the income statement. 2-b. Show how the amounts related to Accounts Receivable would be reported on the balance sheet 3. On the basis of the data available, does the 2 percent rate appear to be reasonable? Journal entry worksheet < 1 2 Record the write-off of a certain customer account from a prior year which is not collectible totaling $1,400. Note: Enter debits before credits. Date December 10, 2021 General Journal Debit Credit Journal entry worksheet < 1 2 Record the estimated bad debt losses at 2 percent of credit sales for the year. Note: Enter debits before credits. Date December 31, 2021 General Journal Debit Credit Operating Expenses: Kelly's Camera Shop Income Statement (partial) Year ending December 31, 2021 Kelly's Camera Shop Balance Sheet (partial) At December 31, 2021 Current Assets