Problem 2 Required: Prepare the entries for bad debts assuming that doubtful accounts are estimated to be (a) 3% of gross accounts receivable and (b)5% of gross accounts receivable. (see note below) and (c) 2% of sales. The trial balance before adjustment of Paul Company reports the following balances: Debit Credit Accounts receivable $200,000 Allowance for doubtful accounts $1,500 Sales ( all on credit) 400,000 Note: Assume for requirement (b) that the Allowance for doubtful accounts has a debit balance of $3,500 instead of a credit balance. Date Account Titles Debit Credit