The Allowance for Bad Debts Account Has a Credit Balance

question 100

Multiple Choice

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the balance of the Allowance for Bad Debts reported on the balance sheet at December 31, 2015?

• A)$7,275
• B)$3,075
• C)$7,000
• D)$5,285

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Definitions:

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