E7-7B (Recording Bad Debts) Rodriguez Company reports the following financial information before adjustments.
Accounts Receivable $25,000
Allowance for Doubtful Accounts $ 500
Sales (all on credit) 225,000
Sales Returns and Allowances 12,500
Prepare the journal entry to record Bad Debt Expense assuming Rodriguez Company estimates bad debts
at (a) 3% of net sales and (b) 8% of accounts receivable.