Accounting for Doubtful Accounts Tr lo for 207, ther second yer of operation: Accounts receivable, 12/31/07 Allowance for doubtful accounts at 12/31/07 (credit balance) Sales on account during 2007 75,000 200 500,000 No adjusting entry for accrual of bad debts has been made for 2007 REQUIRED: (a) Assuming, the company estimates that 0.5% of credit sales are uncollectible 1. Record the adjusting journal entry to record bad debt expense at December 31, 2007. Show all supporting calculations. Complete the following on the balance sheet as of December 31, 2007, after the adjusting entry in (1) above: 2. Accounts Receivable Less: Allowance for doubtful accounts Accounts Receivable (net) What is the effect of the entry in part (a) (1) above on the net income of the firm for 2007? 3. Increase Decrease No effect_ (b) Assuming, the company estimates that 2% of ending accounts receivable may prove uncollectible: Record the adjusting journal entry to record bad debt expense at December 31, 2007. Show all supporting calculations. 1