At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2017, it has outstanding accounts receivable of $146,500, and it estimates that 5% will be uncollectible.

Prepare the adjusting entry to record bad debts expense for year 2017 under the assumption that the Allowance for Doubtful Accounts has:

1. (a) a $2,491 credit balance before the adjustment.

2. (b) a $733 debit balance before the adjustment.