Question 20.) Prior to recording the adjusting entry for bad debt expense for the year, the general ledger reflected the following information:

Sales $ 2,600,000

Sales Discounts $ 12,000

Account Receivable (@ 12/31) $ 420,000

Sales Returns & Allowances $ 44,000

Allowance for Doubtful Accounts $ (1,450) (Debit)

Required:

a. Prepare the adjusting entry for bad debt expense, assuming it is based on 1.8% of net sales.

b. Prepare the adjusting entry for bad debt expense assuming it is based on 3% of the ending account receivable.