Reference no: EM133007359

Problem 1: Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $400,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 10% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

A. Bad Debt Expense = 37,500

Allowance for Doubtful Accounts = 37,500

B. Bad Debt Expense = 19,500

Allowance for Doubtful Accounts = 19,500

C. Bad Debt Expense = 22,000

Allowance for Doubtful Accounts = 22,000

D. Bad Debt Expense = 65,000

Allowance for Doubtful Accounts = 65,000