Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $278,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 8% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,400 before adjustment?

a.

Bad Debt Expense	$19,840
Allowance for Doubtful Accounts		$19,840

b.

Bad Debt Expense	$19,340
Allowance for Doubtful Accounts		$19,340

c.

Bad Debt Expense	$18,840
Allowance for Doubtful Accounts		$18,840

d.

Bad Debt Expense	$20,840
Allowance for Doubtful Accounts		$20,840