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The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:

Accounts receivable	$	455,000	Debit
Allowance for Doubtful Accounts		1,450	Credit
Net Sales		2,300,000	Credit

All sales are made on credit. Based on past experience, the company estimates 2.5% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Multiple Choice

• Debit Bad Debts Expense $12,825; credit Allowance for Doubtful Accounts $12,825.

• Debit Bad Debts Expense $9,925; credit Allowance for Doubtful Accounts $9,925.

• Debit Bad Debts Expense $11,375; credit Allowance for Doubtful Accounts $11,375.

• Debit Bad Debts Expense $15,750; credit Allowance for Doubtful Accounts $15,750.

• Debit Bad Debts Expense $5,750; credit Allowance for Doubtful Accounts $5,750.