Over the Past Five Years, a Company Had Average Annual

Multiple Choice

Over the past five years, a company had average annual credit sales of $320,000 and write-offs this year of $2,000. Credit sales in the current year are $300,000. The balance in the Allowance for Doubtful Accounts is a
$500 credit. Using the percentage of credit sales method, and an estimate of 1%, what amount should the company record as an estimate of bad debt expense?

A) $2,000
B) $3,000
C) $3,500
D) $1,500