M&D Inc. began operations in January 2019. All of the company’s sales are made on account. At the end of its first year of operations, the company’s trial balance at December 31, 2019, showed a $50,000 outstanding balance in Accounts Receivable. During 2019, 75% of the total credit sales were collected and no accounts were written off as uncollectible. Management estimated that 1.5% of the credit sales would be uncollectible. During the following year, 2020, M&D had sales totalling $250,000. It collected 80% of these sales, together with 95% of the outstanding receivables from 2019. During 2020, the accounts of seven customers, who owed a total of $3,800, were judged uncollectible and were written off . During the year, the company recovered $1,500 from customers whose accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) The company estimated its bad debts expense to be 1% of its credit sales.

Required

a. Prepare the necessary journal entries for recording all the preceding transactions in the accounting system of M&D Inc. for 2019 and 2020.

b. Show the accounts receivable section of the statement of financial position at December 31, 2020.