Lil Tots Toys manufactures toys designed for small children. At December 31, 2020, Lil Tots unadjusted trial balance includes the following: Debit Credit Accounts receivable $140,000 Allowance for doubtful accounts $ 890 Sales $425,000 Sales returns and allowances $ 10,000

Required: Prepare adjusting journal entries assuming that the estimate of uncollectible accounts is determined by using:

a) 5% of gross accounts receivable, or

b) 2% of net sales