Balances ending DEC 1

Accounts receivable $425,000

Allowance for doubtful accounts 2,500 (credit)

Burke records bad debt expense using the percentage-of-receivables basis and concludes that 4% of its yearend accounts receivable will become uncollectible.

Instructions

1. Prepare the adjusting entry to record bad debt expense for the year.
2. Prepare the adjusting entry for bad debt expense if the allowance had a debit balance of $1,500.