Mazie Supply Co. Uses the percent of accounts receivable method. On December 31, it has has outstanding accounts receivable of $59,500 and it estimates that 3% will be uncollectible.

Prepare the year-end adjusting entry to record bad debts expense under the assumption that the allowance for doubtful accounts has:

A) a $1,012 credit balance before the adjustment

B) a $298 debit balance before the adjustment.