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 Sales $ 890 Sales returns and allowances $425,000 $10,000

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