king company uses the percentage of sales method for recording bad debts expense. for the year, credit sales are $2,000,000. Management estimates that 2% of total sales are uncollectible. the current balance in the allowance for doubtful accounts is a $10,000 credit. what adjusting entry will king company make to record bad debts expense?

1. debit bad debts expense and credit allowance for doubtful accounts for $50,000
2. debit bad debts expense and credit allowance for doubtful accounts for $40,000
3. debit bad debts expense and credit accounts receivable for $40,000
4. debit bad debts expense and credit accounts receivable for $50,000