Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $103,500, 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 $1,760 credit balance before the adjustment. (b) a $518 debit balance before the adjustment.

Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $103,500, 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 $1,760 credit balance before the adjustment.

(b) a $518 debit balance before the adjustment.