Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $127,000, and it estimates that 4% will be uncollectible.
Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has:
(a) a $2,159 credit balance before the adjustment.
(b) a $635 debit balance before the adjustment.
