Intermediate Accounting I

7. BD Inc uses the percentage of sales method to record bad debt expense. On 1/1/20, BDs allowance for doubtful accounts (ADA) had a credit balance of $10,000. During 2020 BD wrote off $12,000. If 2020 sales on account totaled $400,000 and the estimated bad debt percentage is 1%, what will be the ending balance in the ADA account?

a) $4,000

b) $2,000

c) $6,000

d) $26,000