Question:

Miraglia Company reports the following balances related to its accounts receivable as of $12/31\frac{?}{23}$ :

Accounts Receivable $$369,000$

Allowance for Doubfful Accounts $(unadjusted)4,000(credit$ balance$)$

Assume Miraglia Company uses the percentage$-$of$-$receivables method to estimate its bad debts and concludes that $5\%$ of its accounts receivable will become uncollectible.

Required:

a$)$ What amount of bad debt expense will Miraglia record for $2023?$ Prepare the adjusting journal entry Miraglia would report for $2023.$

b$)$ Assume the Allowance for Doubfful Accounts $($unadjusted$)$ balance at $12/31\frac{?}{23}$ was in a $$2,000$ debit balance. What amount of bad debt expense would Miraglia record for $2023$ in this scenario? Prepare the adjusting journal entry Miraglia would report

for $2023.$

Be sure to use appropriate journal entry format and PROVIDE ALL COMPUTATIONS IN DERIVING YOUR ANSWERS $-$ NO CREDIT WILL BE ISSUED WITHOUT THE NECESSARY COMPUTATIONAL SUPPORT$)$