The following trial balance was prepared for Gifts, Etc., Inc., on December 31, 2013, after the closing entries were posted:

Gifts, Etc. had the following transactions in 2014:

1. Purchased merchandise on account for $405,000. 
2. Sold merchandise that cost $310,000 for $490,000 on account. 
3. Sold for $250,000 cash merchandise that had cost $156,000. 
4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $112,000. The credit card company charges a 4 percent fee. 
5. Collected $520,000 cash from accounts receivable. 
6. Paid $495,000 cash on accounts payable. 
7. Paid $145,000 cash for selling and administrative expenses. 
8. Collected cash for the full amount due from the credit card company(see item 4). 
9. Loaned $60,000 to L. Jones. The note had an 8 percent interest rate and a one year term to maturity. 
10. Wrote off $8,200 of accounts as uncollectible. 
11. Made the following adjusting entries: 
(a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. 
(b) Recorded seven months of accrued interest on the note at December 31, 2014 (see item 9).

Required: 

a. Prepare general journal entries for these transactions; post the entries to T accounts; and prepare an income statement, a statement of changes in stockholders equity, a balance sheet, and a statement of cash flows for 2014. 

b. Compute the net realizable value of accounts receivable at December 31, 2014. 

c. If Candles, Etc. used the direct write off method, what amount of uncollectible accounts expense would it report on the income statement?