The trial balance before adjustment of Santillan Inc. shows the following balances.
Debits: Accounts Receivable $180,000, Allowance for Doubtful Accounts 3,500.
Credits: Sales (all on credit) $1,000,000.
Instructions:
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of:
(a) 5% of gross accounts receivable and
(b) 1% of net sales.