A Company Had the Following Items and Amounts in Its

Essay

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
$\begin{array}{|l|l|r|}\hline & \text { Debit } & \text { Credit } \\\hline \text { Cash sales } & & \$ 88,000 \\\hline \text { Credit sales } & & 275,000 \\\hline \text { Accounts receivable } & \$ 96,000 & \\\hline \text { Allowance for doubtful accounts } & & 1,000 \\\hline\end{array}$
Prepare the adjusting entry to estimate bad debts under each of the following separate situations.
a.Bad debts are estimated to be 2.5% of credit sales.
b.An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.