1. Alladin Corporation uses the allowance method in estimating uncollectibles. At the end of the year, Alladin Corporation estimates that 2% of its credit sales of $1,000,000 will be uncollectible. Allowance for Doubtful Accounts has a credit balance of $1,000 before adjustment. What is the amount of the adjusting entry?

1. Allowance for Doubtful Accounts will appear on the balance sheet as-

1. a contra asset.
2. a contra liability
3. a liability.
4. part of the owners capital