Blue Spruce Corp. uses the percentage-of-receivables basis to record bad debt expense and concludes that2% of accounts receivable will become uncollectible. Accounts receivable are $402,000at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,723.

(a)Prepare the adjusting journal entry to record bad debt expense for the year.(b)If the allowance for doubtful accounts had a debit balance of $904 instead of a credit balance of $2,723, prepare the adjusting journal entry for bad debt expense.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit Credit

(a)

(b)