Lowland Company uses the allowance method of handling credit losses. It estimates losses at two percent of credit sales, which were \(\$ 1,400,000\) during the year. On December 31, the Accounts Receivable balance was \(\$ 280,000\), and the Allowance for Doubtful Accounts had a credit balance of \(\$ 2,100\) before adjustment.

a. Prepare the adjusting entry to record credit losses for the year.

b. Show how the Accounts Receivable account and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.