Creek CoUses the Percentage of Credit Sales Method in Determining Its

Multiple Choice

Creek Co.uses the percentage of credit sales method in determining its bad debt expense.The following information comes from the accounting records of Creek Co.: $\begin{array}{lr}\text { Cash sales } & 300,000 \\\text { Credit sales } & 1,200,000 \\\text { Total sales } & 1,500,000 \\\text { Credit balance in the Allowance for Doubtful Accounts } & 7,500 \\\text { Bad debt loss rate } & 3 \%\end{array}$ What is the estimate of bad debt expense?

A) $36,000
B) $37,500
C) $43,500
D) $45,000