Manning Company uses the allowance method. At the end of its first year of operations, the company estimates that it will not collect $2,500 of its accounts receivable. Prepare the appropriate adjusting journal entry to establish the estimate for uncollectible accounts.

At the end of each period, the company estimates the necessary balance in the allowance for uncollectible accounts and then records whatever adjustment to the allowance and corresponding bad debt expense is necessary to reach that balance.