Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $342,000 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 $1,400 before adjustment?

Select the correct answer.

Bad Debt Expense$21,540

Accounts Receivable$21,540

Bad Debt Expense$23,540

Allowance for Doubtful Accounts$23,540

Bad Debt Expense$22,540

Allowance for Doubtful Accounts$22,540

Bad Debt Expense$22,040

Accounts Receivable$22,040