On December 31, 2005, Dot Gone records show the following results for the year:

Cash Sales $2,362,000

Credit Sales 4,024,000

In addition, its unadjusted trial balance includes the following items:

Accounts Receivable 692,300 debit

Allowance for Doubtful Accounts 29,030 credit

Required:

1 Prepare the adjusting entry for Dot Gone to recognize bad debts under each of the following independent assumptions:

a. Bad debts are estimated to be 3% of credit sales.

b. Bad debts are estimated to be 1% of total sales.

c. An aging analysis suggests 8% of accounts receivable at year-end are uncollectible.

2 Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on the 12/31/05 balance sheet given the FACT IN PART (1a).