Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

Multiple Choice

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

A) $4,845
B) $3,700
C) $3,515
D) $4,180
E) $3,850