E7-7B (Recording Bad Debts) Rodriguez Company reports the following financial information before adjustments.

E7-7B (Recording Bad Debts) Rodriguez Company reports the following financial information before adjustments.

                                                                          Debits             Credits

Accounts Receivable                                    $25,000

Allowance for Doubtful Accounts                                           $ 500

Sales (all on credit)                                                             225,000

Sales Returns and Allowances                   12,500

Instructions

Prepare the journal entry to record Bad Debt Expense assuming Rodriguez Company estimates bad debts

at (a) 3% of net sales and (b) 8% of accounts receivable.