Amy, the chief accountant at Smart Electrical Pty Ltd, decides to use the net credit sales method to account for the business bad debt expenses. She estimates that the bad debt will be 3% of the net credit sales revenue. The accounting records at 30 June 2019 reveals the following. 

Credit sales (for year) $150,000 

Credit sales returns and allowances (for year) $30,000 

Unadjusted balance for Allowance for Doubtful Debts account $200 

CR What is the correct journal entry(ies) to record the allowance for doubtful debts at 30 June 2019 under the net credit sales method? 

Select one: 

Dr Bad debts expense $3,600 

          Cr Allowance for bad debts $3,600 

None of these 

Dr Bad debts expense $3,400 

      Cr Allowance for bad debts $3,400 

Dr Bad debts expense $4,500 

      Cr Allowance for bad debts $4,500 

Dr Bad debts expense $3,400 

       Cr Accounts receivable $3,400