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Murrysville Company had the following data available for 2016 (before making any adjustments): Accounts receivable, 12/31/16 $343,200 (Dr.) Allowance for doubtful accounts 3,800 (Cr.) Net credit sales, 2016 829,000 (Cr.) Prepare the journal entry to recognize bad debts under the following assumptions: Question Content Area

1a. Bad debts expense is expected to be 3% of net credit sales for the year. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

1b. Murrysville expects it will not be able to collect 7% of the balance in accounts receivable at year-end.

Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

2a. Assume instead that the balance in the allowance account is a $3,800 debit. How will this affect your answers to (1)?

Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

2b. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

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