Reference no: EM132998967

Question - The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense, reports the following selected amounts:

Accounts receivable $437,000 Debit

Allowance for Doubtful Accounts 1,270 Debit

Net Sales 2,120,000 Credit

All sales are made on credit. Based on past experience, the company estimates 2.5% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

-Debit Bad Debts Expense $10,925; credit Allowance for Doubtful Accounts $10,925.

-Debit Bad Debts Expense $12,195; credit Allowance for Doubtful Accounts $12,195.

-Debit Bad Debts Expense $15,300; credit Allowance for Doubtful Accounts $15,300.

-Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.

-Debit Bad Debts Expense $9,655; credit Allowance for Doubtful Accounts $9,655.