At the end of the current year, using the aging of accounts receivable method, management estimated that $26,250 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $725. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Multiple Choice

• Account Title	Debit	Credit
  Bad Debts Expense	26,250
  Allowance for Doubtful Accounts		26,250

• Account Title	Debit	Credit
  Bad Debts Expense	25,525
  Allowance for Doubtful Accounts		25,525

• Account Title	Debit	Credit
  Bad Debts Expense	26,975
  Allowance for Doubtful Accounts		26,975

• Account Title	Debit	Credit
  Accounts Receivable	26,250
  Bad Debts Expense	725
  Sales		26,975

• Account Title	Debit	Credit
  Accounts Receivable	26,975
  Allowance for Doubtful Accounts		26,975