The Allowance for Bad Debts Account Has a Credit Balance

question 70

Multiple Choice

The Allowance for Bad Debts account has a credit balance of $2,000. 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 amount of Bad Debts Expense reported on the income statement for 2015?

• A)$5,000
• B)$3,075
• C)$2,875
• D)$2,675

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Definitions:

Sick-building Syndrome

A condition affecting building occupants, characterized by non-specific symptoms linked to time spent in a building with no specific illness identified.

Zygomycetes

A class of fungi characterized by the formation of a zygospore, a resistant structure for sexual reproduction.

Rhizopus

A genus of fungi, known for causing rot in fruits and vegetables and sometimes opportunistic infections in humans.

Zygospore

A sexual spore produced by a zygomycete.