The Accounts Receivable balance for Palm Corporation is $360,000 at January 31, 2022. Before calculating and recording January 2022 bad debt expense, the Allowance for Doubtful Accounts has a debit balance of $4,000. Net sales for the month are $1,400,000. An aging of accounts receivable results in a $26,000 estimate for the Allowance for Doubtful Accounts as of January 31, 2022. In the past several years, 2% of net sales have proven uncollectible. Required:
a. If Palm uses the percent of sales method, Bad Debt Expense on the January 2022 Income Statement will be:
b. If Palm uses the percent of sales method, the Allowance for Doubtful Accounts reflected on the January 31, 2022 Balance Sheet will be: