Burton Lawyers uses the allowance method to record bad debts expense. At the end of December, it is estimated that 3% of Burton Lawyers' accounts receivable will be uncollectable.

Accounts receivable at 31 December are $300,000 and the Allowance for doubtful debts has a credit balance of $7,000.

What is the journal entry needed to adjust the allowance for doubtful debts at the end of December?

a.Dr Bad debts expense $2,000Cr Allowance for Doubtful Debts $2,000

b.Dr Allowance for Doubtful Debts $7,000Cr Bad Debts Expense $7,000

c.Dr Bad debts expense $7,000Cr Allowance for Doubtful Debts $7,000

d.Dr Bad debts expense $1,000Cr Allowance for Doubtful Debts $1,000

e.Dr Allowance for Doubtful Debts $2,000Cr Bad debts expense $2,000