A company had a 1/1/14 balance in the Allowance for Doubtful Accounts of $20,000. During 2014, it wrote off $14,400 of accounts and collected $4,200 on accounts previously written off. The balance in Accounts Receivable was $400,000 at 1/1 and $480,000 at 12/31. At 12/31/14, management estimates that 5% of accounts receivable will prove to be uncollectible.
In T-account format, prepare the adjusting entry to recognize bad debt expense for 2014.