Can you please explain how do we get b and c? How did we get +1300 for b?

Assume the following year end unadjusted balances of selected accounts of the ABC Co.: Accounts receivable Sales revenues (gross, 80% on credit) Sales returns & allowances Allowance for doubtful accounts $40,000 100,000 8,000 200 credit Also assume that ABC Co. just confirmed that it will not be able to collect $1,500 of accounts receivable. This has not yet been recorded. Required 1. Based on the above information, complete the following journal entries. No explanations are required. a. Prepare the journal entry to write off the uncollectible accounts. b. Assuming 5 per cent of the outstanding accounts receivable will not be collectible, provide the journal entry to record bad debt expense. c. Assuming bad debts will be 2 percent of net credit sales, provide the journal entry to record bad debt expense. 2. What is one benefit and one cost of extending credit to customers? Solution a. Allowance for doubtful accounts Accounts receivable 1,500 1,500 b. Bad debt expense = ($40,000 - $1,500) x 5% = 1,925 + 1,300 = $3,225 3,225 Bad debt expense Allowance for doubtful accounts 3,225 c. Bad debt expense = ($100,000 8,000) x 80% x 2%= $1,472 1,472 Bad debt expense Allowance for doubtful accounts 1,472 2. Benefit - Increase in sales Cost - Risk of not collecting