Question: Mazarina makes $ 2 , 0 0 0 , 0 0 0 of sales during the year, 8 5 % of which are on credit.

Mazarina makes $2,000,000 of sales during the year, 85% of which are on credit. Previous industry experience indicates 4% will not be collectible. Mazarina utilises the allowance method.
Which journal entry correctly records the estimate of bad debt expense?
Group of answer choices
DR Allowance for doubtful debts $68,000; CR Accounts receivable $68,000
DR Bad debt expense $1,700,000; CR Allowance for doubtful debts $1,700,000
DR Allowance for doubtful debts $150,000; CR Accounts receivable $150,000
DR Bad debt expense $68,000; CR Allowance for doubtful debts $68,000

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