Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

Question 1 options:

1)	Bad Debts Expense 20,000 Allowance for Doubtful Accounts 20,000

2)	Bad Debts Expense 25,000 Allowance for Doubtful Accounts 25,000

3)	Bad Debts Expense 25,000 Accounts Receivable 25,000

4)	Bad Debts Expense 20,000 Accounts Receivable 20,000