Sandel Company reports the following financial information before adjustments.

E7-7 (Recording Bad Debts) Sandel Company reports the following financial information before adjustments.

Dr.

Cr.

Accounts Receivable

$160,000

Allowance for Doubtful Accounts

$ 2,000

Sales Revenue (all on credit)

800,000

Sales Returns and Allowances

50,000

Instructions

Prepare the journal entry to record bad debt expense assuming Sandel Company estimates bad debts at

(a) 1% of net sales and

(b) 5% of accounts receivable.

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