QUESTION 3

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Estimating the Bad Debts Expense Winstead & Company has accounts receivable of $240,000 and a debit balance of $2,000 in the Allowance for Doubtful Accounts. Two thirds of the accounts receivable are current and one third is past due. The firm estimates that two percent of the current accounts and five percent of the past due accounts will prove to be uncollectible.

The adjusting entry to provide for the bad debts expense under the aging method should be for what amount?

7,200

9,200

5,200

3,200