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A company has $104,000 in outstanding accounts receivable and it uses the allowance method to...

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Accounting

A company has $104,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $940 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

  • $4,160

  • $5,100

  • $3,220

  • None of these is correct.

  • $940

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