A company uses the percent ofsales method to determine its bad debts expense. At the end of thecurrent year, the company's unadjusted trial balance reported thefollowing selected amounts:

  Accountsreceivable

$ 365,000debit

  Allowance foruncollectible accounts

600 credit

  Net sales

810,000credit

All sales are made on credit. Based on past experience, thecompany estimates 0.4% of credit sales to be uncollectible. Whatadjusting entry should the company make at the end of the currentyear to record its estimated bad debts expense?

Debit Bad Debts Expense $2,640;credit Allowance for Doubtful Accounts $2,640.

Debit Bad Debts Expense $2,060;credit Allowance for Doubtful Accounts $2,060.

Debit Bad Debts Expense $3,840;credit Allowance for Doubtful Accounts $3,840.

Debit Bad Debts Expense $1,460;credit Allowance for Doubtful Accounts $1,460.

Debit Bad Debts Expense $3,240;credit Allowance for Doubtful Accounts $3,240.