Allowance for Doubtful Accounts (10 marks) The following data relates to Albacore Inc. for the year 2020: Credit sales for 2020: $5,500,000 Sales returns and allowances for 2020: $250,000 Accounts receivable as at Dec. 31, 2020: $650,000 Allowance for doubtful accounts as at Jan. 1, 2020: $16,000 CR Albacore estimates its bad debt expense during the year as 0.2% of net credit sales. On May 15, 2020, Albacore unexpectedly collected $9,000 of a previously written-off account.

Required:

a) Record the journal entries for: i. The collection of the previously written-off account on May 15; ii. Bad debt expense for the year. b) After the journal entries from a) had been completed, management reviewed the balance in the allowance for doubtful accounts, and determined that it should be 5% of gross accounts receivable. Prepare the adjusting journal entry required.