A Company Had the Following Items and Amounts in Its

Essay

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
$\begin{array} { l l c } & \text { Debit } & \text { Credit } \\ \text { Cash sales } & & \$ 188,000 \\\text { Credit sales } & & 275,000 \\\text { Accounts receivable } & \$ 76,000 & \\\text { Allowance for doubtful accounts } & & 1,000\end{array}$ Prepare the adjusting entry to estimate bad debts assuming bad debts are estimated to be 2.5% of credit sales.