Packet Exercise 6.6 Exercise 1: Buds Inc. began operations on January 1, 2019. The company reported the following selected items in its 2020 financial report: 12/31/2020 12/31/2019 Gross Sales $1,700,000 $2,000,000 Accounts receivable 700,000 800,000 Write-offs of uncollectible accounts 55,000 18,000 Buds estimates bad debts at 3% of gross sales. Analyze the activity in the allowance for doubtful accounts and comment on whether the bad debt estimate has been sufficient to cover the write-offs. Can the Allowance for Doubtful Accounts have an ending DEBIT balance? Exercise 2: The 2019 financial records of Octos Corp. reported Allowance for Doubtful Accounts ending balance of $20,000 (credit) at 12/31/2019. During 2020 the company wrote off $15,000 of accounts receivable as uncollectible and then estimated $8,000 of the ending 12/31/2020 accounts receivables to be uncollectible. Prepare the entry to record the bad debt expense and compute the final balance in allowance for doubtful accounts