On December 31, 2020, Corotel Company's year-end, the unadjusted trial balance included the following items:

Account:Accounts receivable$2,140,000 debit

Allowance for doubtful accounts37,000 debit

Sales ($3,210,000 cash sales)$12,840,000 credit

Required:

1.Prepare the adjusting entry needed in Corotel's books to recognize bad debts under each of the following independent assumptions.

1. Bad debts are estimated to be 2% of credit sales.
2. An analysis suggests that 5% of outstanding accounts receivable on December 31, 2020, will become uncollectible

Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31, 2020 balance sheet given the facts in requirement 1(a).

Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31, 2020balance sheet given the facts in requirement 1(b).