Valli Company Uses the Percentage of Sales Method for Recording $\begin{array}{lrr} \text { Bad Debt Expense } &32,000\\ \text { Allowance for Doubtful Accounts} &&32,000\\\end{array}$

Valli Company uses the percentage of sales method for recording bad debts expense. For the year cash sales are $700000 and credit sales are $2500000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Valli Company make to record the bad debts expense? a.
$\begin{array}{lrr} \text { Bad Debt Expense } &32,000\\ \text { Allowance for Doubtful Accounts} &&32,000\\\end{array}$

b.
$\begin{array}{lrr} \text { Bad Debt Expense } &25,000\\ \text {Allowance for Doubtful Accounts } &&25,000\\\end{array}$

c.
$\begin{array}{lrr} \text {Bad Debt Expense } &25,000\\ \text { Accounts Receivable } &&25,000\\\end{array}$

d.
$\begin{array}{lrr} \text { Bad Debt Expense }&32,000\\ \text {Accounts Receivable } &&32,000\\\end{array}$