Chapter $8$

The general ledger controlling account for Accounts Receivable has a balance of $$120,500$ at year$-$end before adjustment. The company uses the balance sheet approach to estimate uncollectible accounts. By aging the individual customers' accounts, it was determined that the doubtful accounts amounted to $$5,020.$ Prepare the year$-$end adjusting entry for uncollectible accounts under each of the following independent assumptions.

a$.$ Allowance for Doubtful Accounts has a credit balance of $$2,850.$

b$.$ Allowance for Doubtful Accounts has a debit balance of $$925.$