Wasco Company Has Experienced Bad Debt Losses of 5% of Credit

Multiple Choice

Wasco Company has experienced bad debt losses of 5% of credit sales in prior periods.At the end of the year,the balance of Accounts Receivable is $100,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $500.Net credit sales during the year were $150,000.Using the percentage of credit sales method,what is the estimated Bad Debt Expense for the year?

A) $5,000
B) $7,000
C) $7,500
D) $8,000