Splitter Corporation had total sales in the current year of $750,000 and credit sales of $650,000. The Accounts Receivable balance was $450,000 on the balance sheet date and the Allowance for Doubtful Accounts had a credit balance of $10,000 before adjusting entries. Bad debt expense is estimated as 2% of credit sales. The adjusting entry to record estimated bad debt expense would include a

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CThe bad debt expense is calculated as 2% of credit sales, which is 2% of $650,000 = $13,000. This amount is recognized as an expense (Bad Debt Expense) in the income statement and also increases the Allowance for Doubtful Accounts on the balance sheet to reflect estimated uncollectible accounts. The correct journal entry to record this would debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $13,000. Choices A and C both correctly identify the debit to Bad Debt Expense, but the question mistakenly lists the same option twice. The correct credit entry, which is not asked for in the choices, would be to Allowance for Doubtful Accounts.

Splitter Corporation Had Total Sales in the Current Year of $750,000