At each calendar year-end, Rivka Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2011, it has outstanding accounts receivable of $139,500, and it estimates that 2% will be uncollectible.
Prepare the adjusting entry to record bad debts expense for year 2011 under the assumption that the Allowance for Doubtful Accounts has (Omit the "tiny_mce_markerquot; sign in your response):
(a) a $2,371 credit balance before the adjustment.#problem..