P8-7B. Journal Entries for Credit Losses At January 1, the Chesley Company had the following accounts on its books: Accounts receivable............... ........... $252,000 (debit) Allowance for doubtful accounts........................................... 13,600 (credit) During the year, credit sales were $1,622,000 and collections on account were $1,588,000. The follow- ing transactions, among others, occurred during the year: Jan. 11 Wrote off J. Smith's account, $5,600. Apr. 29 Wrote off B. Bird's account, $2,000. Nov. 15 Received $1.000 from B. Bird to pay a debt that had been written off April 29. This amount is not included in the $1,588,000 collections. Dec. 5 Wrote off D. Finger's account, $4,300. 31 In an adjusting entry, recorded the allowance for doubtful accounts at one percent of credit sales for the year. INSTRUCTIONS: a. Prepare journal entries to record credit sales, collections on account, and the transactions and adjustments under the Allowance Method and Direct Write-off Method. b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet under both methods