Question $2$

Prior to the year$-$end adjustment to record bad debt expense the ledger of Stickler

Company included the following accounts and balances:

Cash collections on accounts receivable during $2010$ amounted to $$450,000.$ Sales

revenue during $2010$ amounted to $$800,000,$ of which $75\%$ was on credit, and it was

estimated that $2\%$ of the credit sales made in $2010$ would ultimately become

uncollectible.

Determine the balances of the allowance for doubtful accounts and bad debt expense

after the adjustment to record bad debt expense was made. The allowance for doubtful

accounts has a credit balance prior to the adjusting entry.