(Problem 2)

SolElectronics Co. is preparing 2021 financial statements. During 2021. SolElectronics had $3,500,000 credit sales. Its accounts receivable and allowance for doubtful accounts balances on December 31, 2021 before adjusting entries are as follows:

Accounts receivable 400,000 (Debit)

Allowance for doubtful accounts 2,500 (Debit)

Management estimates that 1.5% of accounts receivable will be uncollectible.

(a) Please prepare an adjusting journal entry to record bad debt expense for 2021.

On February 15th, 2022, Lucky Store, one of its customers, filed bankruptcy and the SolElectronics management determines that its unpaid accounts receivable $3,500 should be written off.

(b) Please prepare a journal entry to write-off accounts receivable from Lucky

Later, on June 1, Lucky informed that it received new investmentsand it is paying back $3,500.

(c) Please prepare journal entries to record collection of accounts receivable from Lucky which was written off on Feb 15th