E8-6 At December 31, 20X2. Circuit Software has an accounts receivable balance of $137,000. Sales revenue for 20X2 is $950,000, including credit sales of $450,000. For each of the following situations, prepare the year-end adjusting entry to record uncollectible-account expense. Show how the accounts receivable and the allowance for uncollectible accounts are reported on the balance sheet. Use the reporting format illustrated for Intel on page 325.

a. Allowance for Uncollectible Accounts has a credit balance of $1,600 before adjustment. Circuit estimates that uncollectible-account expense for the year is 1/2 of 1% of credit sales.

b. Allowance for Uncollectible Accounts has a debit balance of $1.700 before adjustment. Circuit estimates that $2.600 of the accounts receivable will prove uncollectible.