Compute bad debts expense based on the following information:

(a) Ramsey Company estimates that 2% of accounts receivable will become uncollectible. Accounts receivable are $400,000, at the end of the year, and the allowance for doubtful accounts has a $500 credit balance.

(b) Ramsey Company estimates that 3% of accounts receivable will become uncollectible. Accounts receivable are $150,000 at the end of the year, and the allowance for doubtful accounts has a $900 debit balance.