Credit Losses Based on Percentage of Credit Sales Harris Company uses the allowance method of handling its credit losses. It estimates credit losses at 1% of credit sales, which were $6,750,000 during the year. On December 31, the Accounts Receivable balance was $1,125,000, and the Allowance for Doubtful Accounts had a credit balance of $76,500 before adjustment. a. Determine the amount and financial statement effect of the adjustment to record the credit losses for the year. Note: Use negative signs with answers, when appropriate. b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet. Note: Do not use negative signs with any of your answers