Question

At each calendar year-end, Mazie Supply Co. uses the percent ofaccounts receivable method to estimate bad debts. On December 31,2013, it has outstanding accounts receivable of $134,000, and itestimates that 3% will be uncollectible. Prepare the adjustingentry to record bad debts expense for year 2013 under theassumption that the Allowance for Doubtful Accounts has (a) a$2,278 credit balance before the adjustment. (b) a $670 debitbalance before the adjustment. Adjusting entries (all datedDecember 31, 2013).

Dec 31) Prepare the adjusting entry to record bad debts expensefor year 2013 under the assumption that the Allowance for DoubtfulAccounts has a $2,278 credit balance before the adjustment.

Dec 31 b)

Prepare the adjusting entry to record bad debts expense for year2013 under the assumption that the Allowance for Doubtful Accountshas a $670 debit balance before the adjustment.