Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $141,500, 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:

1. (a) a $2,406 credit balance before the adjustment.

2. (b) a $708 debit balance before the adjustment.

No	Transaction	General Journal	Debit	Credit
1	(a)	Bad debts expense
		Allowance for doubtful accounts
2	(b)	Bad debts expense
		Allowance for doubtful accounts