Santana rey, owner of business solutions, realizes that she needs to begin accounting for bad debts expense. assume that business solutions has total revenues of $44,000 during the first three months of 2019, and that the accounts receivable balance on march 31, 2019, is $21,967.prepare the adjusting entry needed for business solutions to recognize bad debts expense on march 31, 2019, under each of the following independent assumptions: (assume a zero unadjusted balance in the allowance for doubtful accounts at march 31)(round amounts to the nearest dollar)a) bad debts are estimated to be 1% of total revenues. b) bad debts are estimated to be 2% of accounts receivable.

The Journal entries are as follows:

(a)

Bad Debt Expense A/c      Dr. $440

To Allowance for Doubtful Accounts     $440

(To record the bad debts)

Workings:

Bad Debt Expense = 1% of Total revenue

                                 = 0.01 × $44,000

                                 = $440

(b)

Bad Debt Expense A/c      Dr. $439.34

To Allowance for Doubtful Accounts     $439.34

(To record the bad debts)

Workings:

Bad Debt Expense = 2% of accounts receivable

                                 = 0.02 × $21,967

                                 = $439.34

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