A company reports a year end credit sales in the amount of 390,000 and accounts receivable of $85,500. The company uses the income statement method to report bad debt estimation. The estimation percentage is 3.5%. There is a current debut balance of $2,000 in the bad debt account and a $2,000 credit balance in the allowance for doubtful accounts.

Record the journal entry using the income statement method.

Then record this transaction using T accounts.