Manning Company uses the allocation 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 of uncollectible accounts. Prepare the appropriate adjusting journal entry to establish the estimate of uncollectible accounts.

At the end of each period, the company estimates the necessary balance in the allowance for bad debts and then records any adjustments to the allowance and corresponding bad debt expense that are necessary to achieve that balance.

Required

Prepare the appropriate adjusting journal entry to establish the estimate of uncollectible accounts.