Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $126,500, allowance for doubtful accounts of $885 (credit) and sales of $1,035,000. If uncollectible accounts are estimated to be 5% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

Multiple Choice

• $7,210

• $6,325

• $5,440

• $5,625

• $5,775