Gleason Co. uses the percentage of accounts receivable basis to record bad debts expense.

It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are $400,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500.

(a) Prepare the adjusting journal entry to record bad debts expense for the year.

(b) If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500. determine the amount to be reported for bad debts expense.