Use the information for Battle Tank Limited in BE7.7 and assume instead that the unadjusted balance in Allowance for Doubtful Accounts is a debit balance of $3,000. Based on this, prepare the December 31, 2020 journal entry to record the adjustment to Allowance for Doubtful Accounts.

BE7.7

Battle Tank Limited had net sales in 2020 of $2.3 million. At December 31, 2020, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable $350,000 debit; Allowance for Doubtful Accounts $4,600 credit. Assuming Battle Tank has examined the aging of the accounts receivable and has determined the Allowance for Doubtful Accounts should have a balance of $42,000, prepare the December 31, 2020 journal entry to record the adjustment to Allowance for Doubtful Accounts.