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Blackhorse Productions, Incorporated, used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $22,750. The account had an unadjusted credit balance of $11,500 at that time.

E8-2 (Algo) Determining Financial Statement Effects of Bad Debt Expense Estimates and Write-Offs (LO 8-2] Blackhorse Productions, Incorporated, used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $22,750. The account had an unadjusted credit balance of $11,500 at that time. a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $2,500 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction (+ for increase or for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) Assets Liabilities + a. + b. = + b. = + Liabilities Stockholders' Equity = + II = + II +