Novakowski Products needs to prepare their year-end financial statements. On December 31, 2021, the balance in Accounts Receivable was $680,000. An aging analysis of the accounts receivable indicated that $16,500 of the accounts receivable is expected to be uncollectible.

Instructions

a)Prepare the adjusting entries to record estimated bad debt expense using the percentage ofreceivables approach for each independent

assumption:

i)Allowance for Doubtful Accounts has a credit balance of $3,200 before adjustment.

ii)Allowance for Doubtful Accounts has a debit balance of $730 before adjustment.

b)Determine the carrying amount of the accounts receivable at December 31, 2021 after therequired adjustments under each assumption.