Problem:
The trial balance before adjustment of Reba McIntyre Inc. shows the following balances.
Dr. Cr.
Accounts Receivable $90,000
Allowance for Doubtful Accounts 1,750
Sales (all on credit) $680,000
Instructions:
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 1% of net sales.