Question: Given that the balance in the Allowance for Doubtful Accounts is $300 credit, prepare adjusting entries for bad debts based on the following assumptions: a.

Given that the balance in the Allowance for Doubtful Accounts is $300 credit, prepare adjusting entries for bad debts based on the following assumptions:
a. Bad debts are to be 5% of net credit sales, or $700.
b. Bad debts should be $600 on the basis of the aging of Accounts Receivable.

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