On 30 June, the end of its financial year, Freedom Advisory Services completed an age analysis of its accounts receivable and determined that an allowance for doubtful debts of $16 250 was needed to report accounts receivable at their estimated collectable amount in the statement of financial position. Ignore GST.

Required:

1. Prepare the entry to record bad debts expense assuming that the Allowance for Doubtful Debts account currently has a $2520 credit balance.
2. Prepare the entry to record bad debts expense assuming that the Allowance for Doubtful Debts account currently has a $1065 debit balance.