At 30 June 2019 Shifty Ltd Had a Balance of Accounts

Multiple Choice

At 30 June 2019 Shifty Ltd had a balance of Accounts receivable of $90 000 and an Allowance for doubtful debts of $4 000. It was further decided that the Allowance for doubtful debts should stand at 5 per cent of Accounts receivable. What was the journal entry needed to adjust the allowance account?

A) DR Bad debts expense $500
CR Accounts receivable $500
B) DR Bad debts expense $500
CR Allowance for doubtful debts $500
C) DR Allowance for doubtful debts $500
CR Accounts receivable $500
D) None of the above