Lester Company Uses the Allowance Method and Estimates Its Bad-Debt

Multiple Choice

Lester Company uses the allowance method and estimates its bad-debt expense based on aging the receivables. Before the adjusting entry, the allowance for doubtful accounts had a $425 debit balance. Based on aged receivables, Lester estimates that $3,700 will probably prove uncollectible. What is the amount of the adjusting journal entry that Lester should make?

A) $3,700
B) $3,275
C) $4,125
D) $425