The trial balance before adjustment of Risen Company reports the following balances:

Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be
(1) 6% of gross accounts receivable. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and ExplanationDebitCredit
(2) 1% of net sales. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. Prepare the journal entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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Dr. Cr $150,000 Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales retums and allowances 40,000 $2,500 850,000