Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $72,500, and it estimates that 6% 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 $1,233 credit balance before the adjustment.

2. (b) a $363 debit balance before the adjustment.