Exercise 7-6 (Algo) Recording and reporting allowance for doubtful accounts LO P2 In its first year of operations, Cloudbox has credit sales of $226,000. Its year-end balance in accounts receivable is $12,600, and the company estimates that $2,800 of its accounts receivable is uncollectible. a. Prepare the year-end adjusting entry to estimate bad debts expense. b. Prepare the current assets section of Cloudboxs classified balance sheet assuming Inventory is $28,500, Cash is $20,500, and Prepaid Rent is $3,650. Note: The company reports Accounts receivable, net on the balance sheet.