Question: AR - Debit: $ 3 0 0 , 0 0 0 Allowance for doubtful accounts - Credit: $ 5 , 0 0 0 Sales Revenue

AR - Debit: $300,000
Allowance for doubtful accounts - Credit: $5,000
Sales Revenue (All on credit)- Credit: $1,700,000
Sales returns and allowances - Debit: $80,000
Please answer the following questions:
1. Prepare the journal entry for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.
2. Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry?

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