Exercise 7-7 Percent of accounts receivable method LO P3 Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $148,500, and it estimates that 5% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $2,525 credit balance before the adjustment. (b) a $743 debit balance before the adjustment. Answer is complete but not entirely correct. No Transaction General Journal Credit Debit 9,950 X | 1 (a) Bad debts expense Allowance for doubtful accounts 9,950 X 2 6,682 X Bad debts expense Allowance for doubtful accounts 6,682 X