Tanning Company Analyzes Its Receivables to Estimate Bad Debt Expense $\quad 17,000$

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

A)
Bad Debt Expense $\quad 17,000$
Allowance for Doubtful Accounts $\quad 17,000$
B)
Bad Debt Expense $\quad 19,500$
Allowance for Doubtful Accounts $\quad 19,500$
C)
Bad Debt Expense $\quad 22,000$
Allowance for Doubtful Accounts $\quad 22,000$
D) Bad Debt Expense $\quad$$\quad$ 65,000
Allowance for Doubtful Accounts $\quad$ 65,000

Correct Answer:

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