Assume the following unadjusted account balances at the end of the accounting period for Johanna Company: Accounts Receivable, $100,000; Allowance for Doubtful Accounts, $1,400 (debit balance); and Net sales, $1,200,000. If Johannas past experience indicates credit losses of 1% of net sales, the adjusting entry to estimate doubtful accounts is:

Select one:

A.

Bad Debts Expense

12,000

Accounts Receivable

12,000

B.

Bad Debts Expense

10,600

Allowance for Doubtful Accounts

10,600

C.

Bad Debts Expense

13,400

Allowance for Doubtful Accounts

13,400

D.

Bad Debts Expense

12,000

Allowance for Doubtful Accounts

12,000