1. Laver Co. had the following balances at December 31.

Accounts receivable	$240,000
Sales discounts	2,000
Sales revenue	335,000
Allowance for doubtful accounts	2,000 (cr.)
Sales returns and allowances	10,000

Required:

Prepare the adjusting entry to record bad debt expense assuming:

a. The company estimates that 6% of net sales is uncollectible.

b. The company estimates that 5% of accounts receivable is uncollectible.

c. Calculate the ending balance of AFDA under both assumptions above (show all work).