Question: Sage Hill Company uses the Percentage of receivables method for recording bad debts expense. The accounts receivable balance is 140000 and credit sales are 1410000.

Sage Hill Company uses the Percentage of receivables method for recording bad debts expense. The accounts receivable balance is 140000 and credit sales are 1410000. Management estimates that 3% of accounts receivable will be uncollectible. What adjusting entry will Sage Hill Company make if the Allowance for Doubtful Accounts has a credit balance of 1400 before adjustment?

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