Computing Bad Debts Under the Allowance Method Based on Receivables

A company has a credit balance of $$1,080$ in its allowance for doubtful accounts. The amount of credit sales for the period is $$144,000,$ and the balance in accounts receivable is $$27,000.$ Assume that the expected credit losses are estimated to be $9\%$ of accounts receivable.

a$.$ What is $(1)$ bad debt expense for the year and $(2)$ the ending balance in the allowance for doubtful accounts?

$1.$Bad debt expenseAnswer $12.$Allowance for doubtful accountsAnswer $2$

b$.$ How would the answer to part a change $($if at all$)$ if the company had a debit balance of $$1,080$ in its allowance for doubtful accounts before any adjustment?

$1.$Bad debt expenseAnswer $32.$Allowance for doubtful accountsAnswer $4$