Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $250,000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable and 1% of credit sales will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? Group of answer choices DR Bad Debt Expense and CR Allowance for Doubtful Accounts $10,000 DR Bad Debt Expense and CR Allowance for Doubtful Accounts for $7,500 DR Bad Debt Expense and CR Accounts Receivable for $7,500 DR Bad Debt Expense and CR Allowance for Doubtful Accounts for $7,000

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $250,000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable and 1% of credit sales will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

Group of answer choices
DR Bad Debt Expense and CR Allowance for Doubtful Accounts $10,000
DR Bad Debt Expense and CR Allowance for Doubtful Accounts for $7,500
DR Bad Debt Expense and CR Accounts Receivable for $7,500
DR Bad Debt Expense and CR Allowance for Doubtful Accounts for $7,000
 
 
 
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