Under the percent-of-sales method, credit sales were $400,000 with a 2% default rate, and the Allowance for receivables has a $600 debit balance. What is the resulting closing credit balance in the allowance after the adjusting entry?

1. The entry amount = $$\$400{,}000 \times 2\% = \$8{,}000$$ credit, regardless of the existing balance. 2. The account starts at a $600 debit balance. 3. Closing balance = $8,000 credit - $600 debit = $7,400 credit. 4. $8,600 would result from a $600 credit start, not a debit; $8,000 ignores the debit. 5. $600 is only the carryover, not the closing balance. 6. Unlike analysis of receivables, the entry stays $8,000; only the resulting balance shifts. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.4 "Allowance Method - Percent of Sales", p.145_