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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

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 $141,500, and it estimates that 3% 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 $2,406 credit balance before the adjustment.

  2. (b) a $708 debit balance before the adjustment.

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