7. Assume that all the information in 6. above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. a. Prepare the adjusting entries to record estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable. b. Prepare the adjusting entries to record estimated bad debts assuming that doubtful accounts are estimated to be 1% of net sales. 1. The car dealer is offering a promotion on a new car purchase that the buyer pays zero interest over 72 months. The monthly payment is $350. The market interest rate for a 72 month car loan is 3.5% annual rate. a. What is the selling price of this car for revenue recognition? b. How much interest revenue will the company record over 72 months? 2. On May 1, 2021, Callaway Golf Co. purchased machinery from Caterpillar Co. They do not need to pay for the machinery until May 1, 2024. Callaway will pay $2,000,000 to Caterpillar Co. on May 1, 2024. The market interest rate for Caterpillar is 4%. a. Prepare the accounting entry for Caterpillar on May 1, 2021 (assume the machinery is delivered on the same day)? b. How much interest revenue will Caterpillar recognize in 2021 assuming its fiscal year ends on December 31.