Part A. On 12/31/16, Phoebe Companys balance sheet revealed a $7,000 balance in its allowance for doubtful accounts. During 2017, $2,000 of accounts were written off and $500 of accounts receivable previously written off were collected. On 12/31/17, bad debt expense was estimated to be 5% on net credit sales, which were $400,000

Required: Calculate the balance in the allowance for doubtful accounts on 12/31/17.

Part B. The following information was taken from the unadjusted trial balance and aging schedule of Diane Company on December 31, 2017. All sales are on account.

Accounts and related balances at December 31, 2017 before adjustment:

	Debit	Credit
Accounts receivable	$46,000
Allowance for doubtful accounts		$ 680
Sales (all on account)		500,000
Sales returns	3,000

Aging Schedule of Accounts Receivable:

Age	Amount	% Uncollectible
0-30 days	$14,000	5%
30-60 days	20,000	8%
Over 60 days	12,000	12%

Required: If Diane uses the aging schedule of accounts receivable to determine bad debts, what is the bad debt expense for the year ending December 31, 2017?