Sunny Company uses the percentage of receivables method for recording bad debt expense. The accounts...
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Sunny Company uses the percentage of receivables method for recording bad debt expense. The accounts receivable balance is $500,000 and credit sales are $1,670,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Sunny Company make to record bad debt expense if the Allowance for Doubtful Accounts has a $5,000 credit balance before adjustment? DR: Bad Debt Expense $20,000; CR: Allowance for Doubtful Accounts $20,000 DR: Bad Debt Expense $25,000; CR: Allowance for Doubtful Accounts $25,000 DR: Bad Debt Expense $20,000; CR: Accounts Receivable $20,000 DR: Bad Debt Expense $25,000; CR: Accounts Receivable $25,000 DR: Bad Debt Expense $5,000; CR: Allowance for Doubtful Accounts $5,000
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