Credit Losses Based on Credit Sales Highland Company uses the allowance method of handling credit losses. It estimates credit losses at $2\%$ of credit sales which were $$2,400,000$ during the year. On December $31,$ the Accounts Receivable balance was $$560,000$ and the Allowance for Doubtful Accounts had a credit balance of $$3,400$ before adjustment.

a$.$ Prepare the adjusting entry to record the credit losses for the year.

b$.$ Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December $31$ balance sheet.