1)On December 31, 2023, Rainbow Appliances has $275,000 in accounts receivable and an allowance account with a debit balance of $320. Current period net credit sales were $780,000, and cash sales were $68,000.

a) Rainbow Appliances performs an aging schedule, and the results are summarized below, along with the appropriate percentages that Rainbow applies to the categories shown.

Percentage

Days OutstandingAmountUncollectible

Not yet due$150,0001%

31-60 days past due50,0005%

61-90 days past due40,00010%

91-120 days past due25,00025%

Over 120 days past due10,00050%

Assuming Rainbow uses the aging approach of accounting for uncollectible accounts, prepare the adjusting entry required at the end of the accounting period. (5 points)

b) Assume now Rainbow uses the percent-of-sales method of accounting for uncollectible accounts. If historical data indicate that approximately 3% of net credit sales are uncollectible, what is the amount of bad-debt expense and what is the balance in the allowance for doubtful accounts after adjustment?