Assume the following unadjusted account balances at the end of the accounting period for Morgen Company: Accounts Receivable, $200,000; Allowance for Doubtful Accounts, $2,800 (debit balance); and Net sales, $2,400,000. If Morgens past experience indicates credit losses of 1% of net sales, the adjusting entry to estimate doubtful accounts is:

Select one:

A.

Bad Debts Expense

26,800

Allowance for Doubtful Accounts

26,800

B.

Bad Debts Expense

24,000

Accounts Receivable

24,000

C.

Bad Debts Expense

24,000

Allowance for Doubtful Accounts

24,000

D.

Bad Debts Expense

21,200

Allowance for Doubtful Accounts

21,200