Answer:
C. debit to Bad Debt Expense for $7,200.
Explanation:
The company needs to reflects the total amount in the Allowance for Doubtful Accounts as credit balance, if the balance today it’s $700, you need a new entry to adjust the balance with the Bad Debt Expense account.
The entry must be a credit in Bad Debt Expense for $7,200 and the correspondent debit in the Allowance for Doubtful Accounts as credit.