Highland Company uses the allowance method of handling credit losses. It estimates losses at 1% of credit sales, which were $1,200,000 during the year. On December 31, the Accounts Receivable balance was $280,000, and the Allowance for Doubtful Accounts had a credit balance of $1,700 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

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		$ XX,XXX
Accounts receivableBad debt expenseSales revenueLess Allowance for doubtful accounts
Accounts receivableBad debt expenseSales revenueLess Allowance for doubtful accounts
Inventory		XXX,XXX
Other current assets		X,XXX
Total Current Assets		$XXX,XXX