On December 31, 2016 Ajax Company had a credit balance of $2000 in its allowance for the uncollectible account (allowance for bad debts). Ajax using aging of accounts receivable determined that the allowance in the allowance account at the end of 2016 should be $7000.

A. What entry should Ajax make to adjust the balance in allowance account at year-end?

B. If, instead, Ajax used the percentage of sales approach what would the bad debt expense entry be if total credit sales for the year amounted to $500,0,000 and the rate of loss on credit sales has historically been 1 percent?