Part 5: Allowance for Doubtful Accounts

During the fiscal 2020 year, SpaceX had made credit sales of $1,000,000. The outstanding Accounts Receivable were $250,000. The unadjusted Allowance for Doubtful accounts had a balance of $10,000. Record the bad debt expense and corresponding journal entry if:

1) Bad debt is estimated using a percentage of AR (5%)

2) Bad debt is estimated using a percentage of credit sales (2%)