A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable$375,000debitAllowance for uncollectible accounts 500debitNet Sales 800,000creditAll sales are made on credit. Based on past experience, the company estimates that 0.6% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?
A. $4,800
B. $4,500
C. $1,275
D. $1,775
E. $5,500
Answer: A
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