Munchener Corp.'s unadjusted trial balance includes the following balances:

  Accounts receivable Dr $150,000

  Allowance for doubtful accounts   Cr.  $ 3,500

    Sales (all on credit)  Cr. 720,000

    Sales returns and allowances 30,000

 Questions 

1. 1. prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be 
2. (a) 5% of gross accounts receivable and 
3. (b) 2% of net sales.

2.  Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $3,500 instead of a credit balance.