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 $60,500, 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:

(a) a $1,029 credit balance before the adjustment.

(b) a $303 debit balance before the adjustment.

Exercise 7.6 Percent of accounts receivable method LO P3 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 $60,500, 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: (a) a $1,029 credit balance before the adjustment. (b) a $303 debit balance before the adjustment