On Average, 5% of Total Accounts Receivable Has Been Uncollectible

Multiple Choice

On average, 5% of total accounts receivable has been uncollectible in the past. At the end of the year, the current balance of accounts receivable is $100,000. The allowance for doubtful accounts has an unadjusted debit balance of $500. Credit sales during the year were $150,000. The estimated bad debt expense is:

A) $4,500.
B) $5,000.
C) $5,500.
D) $7,000.