Company X is in its first year of operations and has decided to use the percentage of sales method for estimating uncollectible accounts. Sales for the year totaled $112,000. Company X has assessed uncollectible accounts at 10% of sales. The company recorded $11,200 of bad debt expense. Write-offs for the period were $3,000. What is the effect of this transaction?

a. Net income is overstated by 3,000

b. None of the these

c. Bad debt expense is overstated by 3,000

d. Cost of Goods sold is understated by 3,000