A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

Accounts receivable	$	353,000		Debit
Allowance for doubtful accounts		620		Debit
Net sales		798,000		Credit

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales 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 $2,738; credit Allowance for Doubtful Accounts $2,738.

Debit Bad Debts Expense $4,168; credit Allowance for Doubtful Accounts $4,168.

Debit Bad Debts Expense $5,408; credit Allowance for Doubtful Accounts $5,408.

Debit Bad Debts Expense $4,788; credit Allowance for Doubtful Accounts $4,788.

Debit Bad Debts Expense $2,118; credit Allowance for Doubtful Accounts $2,118.