dolution

Geyser Company began operations in 2004. It had credit sales of $4 million and cash sales of 1 million. The chief accountant decided to estimate doubtful accounts expense at 5% of total credit sales. During the year, 3.5 million of the credit sales were collected from customers and by the end of the year, 150,000 had been written off as uncollectible. At the end of the second year of operations, credit sales were $6 million and cash sales were 1.5 million. The accountant decided that it would be more accurate to base doubtful accounts expense on ending Accounts Receivable. Accordingly, it was estimated that the ending balance of Allowance for Doubtful Accounts should have a balance equal to 8% of Accounts Receivable. During the year, 5.4 million was collected from customers and 180,000 was written off as uncollectible. For each of the two years, determine the following amounts:

(a). The ending balance of Accounts Receivable

(b). The estimated Doubtful Accounts Expense

(c). The ending balance in the Allowance for Doubtful Accounts