Assume the following unadjusted account balances at the end of the accounting period for Emmie Company: Accounts Receivable, $300,000; Allowance for Doubtful Accounts, $4,200 (debit balance); and Net sales, $3,600,000. If Emmies past experience indicates credit losses of 1% of net sales, the adjusting entry to estimate doubtful accounts is:

Select one:

A.

Bad Debts Expense

40,200

Allowance for Doubtful Accounts

40,200

B.

Bad Debts Expense

31,800

Allowance for Doubtful Accounts

31,800

C.

Bad Debts Expense

36,000

Accounts Receivable

36,000

D.

Bad Debts Expense

36,000

Allowance for Doubtful Accounts

36,000