A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

Accounts receivable	$	377,000	debit
Allowance for uncollectible accounts		520	credit
Net Sales		820,000	credit

All sales are made on credit. Based on past experience, the company estimates that 0.4% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Multiple Choice

• $886

• $1,406

• $3,016

• $3,280

• $4,056