The Rock has credit sales of $425,000 during 2013 and estimates at the end of 2013 that 1.5% of these credit sales will eventually default. Also, during 2013 a customer defaults on a $1,200 balance related to goods purchased in 2012.

Required:

1. Prepare the journal entry to record the defaulted balance.

2. Prepare the adjusting entry to record the bad debt expense for 2013.