E7-7 (LO3) (Recording Bad Debts) Duncan Company reports the following financial information before adjustments. Dr. Cr. Accounts Receivable $100,000 Allowance for Doubtful Accounts $2,000 Sales Revenue (all on credit) 900,000 Sales Returns and Allowances 50,000 .

Instructions Prepare the journal entry to record Bad Debt Expense assuming Duncan Company estimates bad debts at (a) 5% of accounts receivable and (b) 5% of accounts receivable but Allowance for Doubtful Accounts had a $1,500 debit balance.