Tanning Company Uses the Percentage of Receivables Method for Recording

question 23

Multiple Choice

Tanning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that 5% will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Bad Debts account has a credit balance of $2,000 before the adjustment?

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