Splish Brothers Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes that3% of accounts receivable will become uncollectible. Accounts receivable are $402,700at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,897.

(a)Prepare the adjusting journal entry to record bad debt expense for the year.

(b)If the allowance for doubtful accounts had a debit balance of $989 instead of a credit balance of $2,897, prepare the adjusting journal entry for bad debt expense.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No. Account Titles and Explanation Debit Credit

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