Unadjusted Trial Balance

Dr$.$ Cr$.$

Accounts receivable $$400,000$

Allowance for doubtful accounts $$7,000$

Sales $($all on credit$)1,600,000$

Sales returns and allowances $74,000$

$1.$ Prepare a journal entry for estimated bad debts assuming that doubtful accounts are estimated to be $4\%$ of gross accounts receivable. Show your calculations.

$2.$ Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $$4,000$ instead of a credit balance. How will this difference affect the journal entry in Part $1?$ Explain your answer.