common fixed expenses should not be allocated to business segments when performing break-even calculations and making decisions.

Dr Bad Debt Expense $28,000

Cr Allowance for Doubtful Accounts $28,000

Explanation:

Preparation of the December 31,2015, journal entry to record bad debt expense.

Based on the information given the December 31,2015, journal entry to record bad debt expense will be :

Dr Bad Debt Expense $28,000

Cr Allowance for Doubtful Accounts $28,000

($1,400,000 *2%)

(To record bad debt expense)