Rodriguez Company reports the following financial information before adjustments.
Debits: Accounts Receivable $25,000, Sales Returns and Allowances 12,500.
Credits: Allowance for Doubtful Accounts $ 500, Sales (all on credit) 225,000.
Instructions:
Prepare the journal entry to record Bad Debt Expense assuming Rodriguez Company estimates bad debts at:
(a) 3% of net sales and
(b) 8% of accounts receivable.