Healthy Lawn Maintenance Company Started a Lawn Services Business on January

Healthy Lawn Maintenance Company started a lawn services business on January 1, 2013. It sends invoices to its customers for lawn maintenance services at the end of each month, and expects the customer to pay within 30 days. During 2013, Healthy Lawn Maintenance billed its customers a total of $2,000,000 for services rendered during the year. It made journal entries at the end of each month.

Assume that Healthy Lawn Maintenance estimates that it will not collect 2% of total credit sales in a given month. At the end of each month, it makes an adjusting entry. The aggregate effect of these entries during 2013 is as follows:

A) Bad Debt Expense. . .. . . . . . . . . . . . . . . . . . 40,000
Accounts Receivable, net. .. . . . . .. . . . . . . . 40,000
B) Allowance for Uncollectibles .. . . . . . . . . . . . . . 40,000
Bad Debt Expense. .. . . . . . . . . . . . . . . . . 40,000
C) Bad Debt Expense. . . . . . . . . . . . . . . . . . . . 40,000
Allowance for Uncollectibles . . . . .. . . . . . . . 40,000
D) Bad Debt Expense. . . . . . . . . . . . . . . . . . . . 40,000
Accounts Receivable, gross . . . . . . . .. . . . . 40,000
E) Accounts Receivable, gross . . . . . .. . . . . . . . . . 40,000
Bad Debt Expense. . . .. . . . . . . . . . . . . . . 40,000