4. Bad Debts - Sales $320 000, Sales Returns $10 000, A/R $100 000, ADA $4 000. a) Prepare adjusting entry using the income statement method if 1% of net sales is bad debt. b)i) Prepare adjusting entry using the balance sheet method if 10% of A/R is bad debt. ii) What if ADA has a debit balance of $7000