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The allowance for bad debts account has a credit balance of

Problem

The Allowance for Bad Debts account has a credit balance of $2,000. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the amount of Bad Debts Expense reported on the income statement for 2015?

$3,075
$2,875
$5,000
$2,675

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Accounting Basics: The allowance for bad debts account has a credit balance of

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