The Rock has credit sales of $425,000 during 2019 and estimates at the end of 2019 that 1.5% of these credit sales will eventually default. Also, during 2019 a customer defaults on a $1,200 balance related to goods purchased in 2019.
Required:
1. Prepare the journal entry to record the defaulted balance.
2. Prepare the adjusting entry to record the bad debt expense for 2019?