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8) On December 31, 2016 before adjusting entries, Accounts Receivable for Nickolas Company had a debit balance of $200,000, and the Allowance for Doubtful Accounts

8) On December 31, 2016 before adjusting entries, Accounts Receivable for Nickolas Company had a debit balance of $200,000, and the Allowance for Doubtful Accounts had a credit balance of $6,000. Credit sales for the year were $1,600,000.

If bad debt expense is estimated at 1% of credit sales, which of the following is correct?

A) The balance of the Allowance for Doubtful Accounts will be $10,000 after recording bad debt expense.

B) The balance of the Allowance for Doubtful Accounts will be $22,000 after recording bad debt expense.

C) The balance of the Allowance for Doubtful Accounts will be $16,000 after recording bad debt expense.

D) Bad Debts Expense for the year will be $22,000.

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