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, $290,000
• Accounts receivable, $110,000
• Sales discounts, $14,000
• Allowance for doubtful accounts credit balance, $1,200
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.