8.3 Kingston Publishers uses the percentage-of-receivables basis to record bad debt expense. It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are 420,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of 1,500.

1. Prepare the adjusting journal entry to record bad debt expense for the year.

2. If the allowance for doubtful accounts had a debit balance of 800 instead of a credit balance of

   1,500, determine the amount to be reported for bad debt expense.

8.4 Presented below are two independent transactions.

1. Fiesta Restaurant accepted a Visa card in payment of a 175 lunch bill. The bank charges a 4% fee. What entry should Fiesta make?

2. St. Pierre AG sold its accounts receivable of 60,000. What entry should St. Pierre make, given a service charge of 3% on the amount of receivables sold?