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Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 7% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $1,600 before adjustment?

a.

Bad Debt Expense	19,400
Allowance for Doubtful Accounts		19,400

b.

Bad Debt Expense	18,400
Allowance for Doubtful Accounts		18,400

c.

Bad Debt Expense	18,900
Allowance for Doubtful Accounts		18,900

d.

Bad Debt Expense	20,400
Allowance for Doubtful Accounts		20,400