Guinevere Company has the following data extracted from its Accounts Receivable records at June 30, 2011

Customer	Balance		Current		31 -75 days		Over 75 days
A	$	8,000	$	5,000	$	2,000	$	1,000
B	$	2,000		-	$	2,000		-
C	$	4,000	$	4,000		-		-
D	$	9,000	$	2,000	$	1,000	$	6,000
E	$	3,000	$	2,000		-	$	1,000
F	$	6,000	$	6,000		-		-
G	$	7,000	$	3,000	$	3,000	$	1,000
Totals	$	39,000	$	22,000	$	8,000	$	9,000

Guinevere's sales terms are 1/15 n/30 and it records sales at the gross amount of the invoice.

Guinevere's year end is June 30

The unadjusted balance in the Allowance for Doubtful Accounts at June 30 is $8,000 dr.

Guinevere makes average sales of $2,000,000 per year and averages write offs of uncollectible balances of $100,000 per year.

Sales for the year ended June 30, 2010 are $1,400,000 credit sales and $400,000 cash sales

Guinevere has a very conservative receivables management strategy.

No adjusting entries have been recorded at June 30

Assume that Guinevere does an aging analysis and adjusts its Allowance to a $20,000 credit balance on June 30 and on July 4 it reads in the Toronto Star that customer F has gone bankrupt. Guinevere should:

Multiple Choice

Make an entry crediting bad debt expense for $6,000

Make an entry debiting bad debt expense for $6,000

Make an entry debiting bad debt expense for $10,000

Say some unprintable words but make no accounting entry

None of the other are correct statements