Splish Brothers Inc. uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $320000 and credit sales are $3210000. Management estimates that 4% of accounts receivable will be uncollectible. What adjusting entry will Splish Brothers Inc. make if the Allowance for Doubtful Accounts has a credit balance of $3200 before adjustment?
a. Bad Debt Expense 9600 Allowance for Doubtful Accounts 9600
b. Bad Debt Expense 9600 Accounts Receivable 9600
c. Bad Debt Expense 32100 Accounts Receivable 32100
d. Bad Debt Expense 32100 Allowance for Doubtful Accounts 32100
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