Flyer Company Has Provided the Following Information Prior to Any

Multiple Choice

Flyer Company has provided the following information prior to any year-end bad debt adjustment: • Cash sales,$150,000
• Credit sales,$450,000
• Selling and administrative expenses,$110,000
• Sales returns and allowances,$30,000
• Gross profit,$490,000
• Accounts receivable,$110,000
• Sales discounts,$14,000
• Allowance for doubtful accounts credit balance,$1,200
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Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible.What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

A) $7,950.
B) $6,750.
C) $5,550.
D) $7,800.