Refer to the information in Exercise 7-6 to complete the following requirements.
a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4.5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,000 credit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,000 debit.
Exercise 7-6

Days Past Due 31 to 60 Total 61 to 90 I to 30 Over 90 Accounts receivable ....... $570,000 $396,000 $90,000 2% $36,000 5% $18,000 7% $30,000 Percent uncollectible ...... 10% 1%