Accounting: Give journal entries assuming the estimate of collectibles is determined via the following methods?

-I'm working to try and answer this one myself, though Taxation course work is being a pain and I'm forced to devote my attention to it. The question is listed below.



-----



A trial balance before adjustment included the following:



Accounts Receivable = $90000 (DR)

Allowance for Doubtful Accounts = $730 (CR)

Sales = $360000 (CR)

Sales Returns and Allowances = $8000 (DR)



Give journal entries assuming that the estimate of uncollectibles is determined by taking

(1) five percent of gross accounts receivable, and

(2) one percent of net sales.



-----



Please show your work.(1) five percent of gross accounts receivable,



When using percentage of receivables as a basis for estimating uncollectible accounts, the CREDIT balance in Allowance for Doubtful Accounts AFTER the adjustment must equal the amount that is estimated to be uncollectible.



90,000 x 5% = 4,500 Estimated to be uncollectible

4,500 - 730 = 3,740

Dr Bad Debt Expense 3,740

Cr Allowance for Doubtful Accounts 3,740

Allowance for Doubtful Accounts now has a credit balance of 4,500



(2) one percent of net sales.



When using percentage of Net Sales as a basis, the current balance in Allowance for Doubtful Accounts is ignored.

(360,000 - 8,000) x 1% = 3,520

Dr Bad Debt Expense 3,520

Cr Allowance for Doubtful Accounts 3,520(1)

Debit Bad Debts Expense $3,770

Credit Allowance for Doubtful Accounts $3,770 (90,000 * 5% = 4,500 required - 730 already in the allowance account)



(2)

Debit Bad Debts Expense $3,520 [(360,000 - 8,000) x 1%]

Credit Allowance for Doubtful Accounts $3,520