13. 26) Smart Art is a new establishment. During the rst year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-ofsales method to account for bad debts expense, and decided to use a factor of 2% for their year-end adjustment of bad debts expense. The ending balance in Allowance for Bad Debts account would be a. $150 b. $800 c. $250 d. $1,450