E7-9B (Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Santillan Inc.

E7-9B (Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Santillan Inc. shows the following balances.

                                                                   Debits                        Credits

Accounts Receivable                              $180,000

Allowance for Doubtful Accounts                3,500

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

Instructions

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 5% of gross accounts receivable and (b) 1% of net sales.