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The following information is provided:
Unadjusted balance in Allowance for Doubtful Accounts $1,100 (debit)
Accounts Receivable, December 31 245,500
Sales Returns and Allowances 5,500
Sales 850,000
Sales Discounts 15,000
Required:
1. Prepare the adjusting entry if bad debts are estimated to be 1.5% of net sales.
2. Compute the amount of the adjusting entry if bad debts are estimated to be 3% of ending accounts receivable.
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