Claireco uses the allowance method to write off all bad debts. On 12/31/XX an aged accounts receivable indicated that bad debt expense would be $35,000. The balance in the Allowance account on that date was a credit of $8,000. It was also estimated that the bad debts expense for the year would be 1% of the years credit sales of $4,000,000.

Required: 1A.Assume that you want to inform the banking industry what your bad debt exposure will be, make the journal entry required on 12/31/XX.

1B. Assume that you want to inform the stockholders what your bad debt exposure will be, make the journal entry required on 12/31/XX