Kandel Company had the following data available for 2016 (before making any adjustments):

Accounts receivable, 12/31/16$330,000.00 (Dr.)Allowance for doubtful accounts3,600.00 (Cr.)Net credit sales, 2016840,000.00 (Cr.)

Required:

1.Prepare the journal entry to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2.00% of net credit sales for the year and (b) Kandel expects it will not be able to collect 5.00% of the balance in accounts receivable at year-end.2.Assume instead that the balance in the allowance account is a $3,600.00 debit. How will this affect your answers to part (1)?

1. Prepare the journal entry with the impact on the financial statements on December 31 to recognize bad debts under the following assumptions:

(a)Bad debts expense is expected to be 2.00% of net credit sales for the year.(b)Kandel expects it will not be able to collect 5.00% of the balance in accounts receivable at year-end.

2. Assume instead that the balance in the allowance account is a $3,600.00 debit. How will this affect your answers to part (1)?

(a)Based on 2.00% of net credit sales.(b)Based on 5.00% of year-end accounts receivable.