Gray Company uses the allowance method of handling expenses due to bad debts. Gray Company’s Accounts Receivable account has a balance of $ 82,000. Net sales for the year total $ 104,000. Write the adjusting entry to record the estimated Bad Debts Expense under each of the following conditions. Assume that Allowance for Doubtful Accounts has a credit balance of $ 650.
a. Aging of the charge accounts in the accounts receivable ledger indicates doubtful accounts of $ 1,570.
b. Bad Debts Expense is estimated at ¾ percent of net sales.