At December 31 of the current year, Johnson Co. reported the following: Total sales for the current year: $700,000, includes $160,000 in cash sales. Accounts Receivable balance at Dec. 31, current year: $200,000. Bad debts written off during the current year: $7,000. Balance of Allowance for Doubtful Accounts at January 1, current year: $8,300. Prepare the necessary adjusting entries to record bad debts expense assuming this company’s bad debts are estimated to equal:

(a) 2% of credit sales.

(b) 4% of accounts receivable.

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