Peterson Company uses the income statement approach in estimating uncollectibles. At the end of the year, Peterson Corporation estimates that 3% of its credit sales of $500,000 will be uncollectible. Allowance for Doubtful Accounts has a debit balance of $5,000 before adjustment. The adjusting entry involves a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts for $10,000. Bad Debts Expense and a credit to Allowance for Doubtful Accounts for $20,000. Bad Debts Expense and a credit to Allowance for Doubtful Accounts for $15,000. Bad Debts Expense and a credit to Accounts Receivable for $15,000.