Modern Designs is a new business. During its first year of operations, credit sales were

$ 40 comma 000

and collections of credit sales were

$ 36 comma 000

.

One account,

$ 625

,

was written off. Management uses the

percentminus

ofminus

sales

method to account for bad debts expense and estimates

3

%

of credit sales to be uncollectible. Bad debts expense for the first year of operations is ________.

A.

$ 1 comma 200

B.

$ 575

C.

$ 2 comma 280

D