In its first year of operations, Cloudbox has credit sales of $200,000. Its year-end balance in Accounts Receivable is $10,000, and the company estimates that $1,500 of its accounts receivable is uncollectible.

a. Prepare the year-end adjusting entry to estimate bad debts expense.

b. Prepare the current assets section of Cloudbox’s classified balance sheet assuming Inventory is $22,000, Cash is $14,000, and Prepaid Rent is $3,000. Note: The company reports Accounts receivable, net on the balance sheet.