A & A Musical Instrument, Inc., sells its merchandise on credit. In the company's last fiscal year, which ended July 31, it had net sales of $3,500,000. At the end of the fiscal year, it had Accounts Receivable of $900,000 and a credit balance in Allowance for Doubtful Accounts of $5,600. In the past, the company has been unable to collect on approximately 1 percent of its net sales. An aging analysis of accounts receivable has indicated that $40,000 of current receivables are uncollectible. They also estimate 4% of Accounts Receivable to be uncollectible. Calculate the amount of bad debt expenses, and use T-accounts to determine the resulting balance of Allowance for Doubtful Accounts under the percentage of net sales method, the accounts receivable aging method, and the percent of Accounts Receivable method. How would your answer change if Allowance for Doubtful Accounts had a debit balance of $5,600 instead of a credit balance? 1. 2. Farm Implement Corporation sells merchandise on credit and also accepts notes as payments. During the year ended June 30, the company had net sales $1,200,000. At the end of the year, it had Accounts Receivable of $400,000 and a debit balance in Allowance for Doubtful Accounts of $2,100. In the past, approximately 1.5 percent of net sales has been uncollectible. Also an aging analysis of accounts receivable reveals that $17,000 in accounts receivable appears to be uncollectible. They also estimate 5% of Accounts Receivable to be uncollectible. 1. Compute Bad Debt Expense, and determine the ending balance of Allowance for Doubtfu Accounts and Accounts Receivable, Net, under a) the percentage of net sales method, b) the accounts receivable aging method, and c) the percent of accounts receivable method