Mazie Supply Company uses the percent of accounts receivable method. On December $31,$ it has outstanding accounts receivable of $$77,500,$ and it estimates that $4\%$ will be uncollectible.

Prepare the year$-$end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has:

$($a$)$ a $$1,318$ credit balance before the adjustment.

$($b$)$ a $$388$ debit balance before the adjustment.

Answer rating: 100% (QA)

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