Eaton Company uses the allowance method of estimating expenses due to bad debts. On December 31, before any adjustments have been recorded, the ledger contains the following balances:
Sales ................. $ 160,000
Sales Returns and Allowances ....... 34,000
The company estimates that bad debts expense will be 1 percent of net sales. Journalize the adjusting entry to record the estimated Bad Debts Expense. The Allowance for Doubtful Accounts account has a credit balance of $ 450.