For 2021, Rahal's Auto Parts estimates bad debt expense at 2% of credit sales. The company reported accounts receivable and an allowance for uncollectible accounts of $88,500 and $2,500, respectively, at December 31, 2020. During 2021, Rahal's credit sales and collections were $408,000 and $412,000, respectively, and $2,940 in accounts receivable were written off.

Rahal's final balance in its allowance for uncollectible accounts at December 31, 2021, is:

Multiple Choice

• $5,340.
• $4,500.
• $7,720.
• $8,160.