E7-9.

(Computing Bad Debts and Preparing Journal Entries)

(LO 3) The trial balance before adjustment of Taylor Swift Inc. shows the following balances.

	Dr.	Cr.
Accounts Receivable	$90,000
Allowance for Doubtful Accounts	1,750
Sales Revenue (all on credit)		$680,000

Instructions

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,700 credit balance.