Credit Losses Based on Percentage of Credit Sales Highland Company uses the allowance method of handling credit losses. It estimates losses at 2% of credit sales, which were $1,800,000 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. Determine the amount of the adjustment to record credit losses for the year. Note: Use negative signs with answers, when appropriate. Balance Sheet Income Statement Stockholders' Assets = Liabilities + Equity Revenues Expenses Net Income 0 $ 0 $ 0 $ 0 $ 0 $ b. Show how the Accounts Receivable account and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet. Note: Do not use negative signs with any of your answers. Balance Sheet (excerpt) Current assets Cash Inventory Other current assets Total Current Assets $ XX.XXX $ 0 0 0 XXX,XXX X,XXX $XXX.XXX