Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company's accounting manager provides Ernie with the following information, before any adjustment. $500,000 9% Accounts receivable Estimated percent uncollectible Allowance for uncollectible accounts Operating income $ 20,000 (debit) $320,000 In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $275,000. Ernie knows that it's important to report an upward trend in earnings. This is important not only for Ernie's compensation and employment, but also for the company's stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company's stock. This has caused Ernie many sleepless nights. Required: 1. Record the adjustment for uncollectible accounts using the accounting manager's estimate of 9% of accounts receivable. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the bad debt expense. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry View general journal Clear entry 2-a. After the adjustment is recorded in Requirement 1, what is the revised amount of operating income? Operating income incerating 2-b. Does operating income increase or decrease compared to the previous year? Increase Decrease 3. Ernie instructs the accounting manager to record the adjustment for uncollectible accounts using 4% rather than 9% of accounts receivable. After this adjustment, does operating income increase or decrease compared to the previous year? Increase Decrease 4. How much would total assets and expenses be misstated using the 4% amount? Total assets