On December $31,$ Year $1,$ the Loudoun Corporation estimated that $3\%$ of its credit sales of $$112,500$ would be uncollectible. Loudoun uses the allowance method. On February $15,$ Year $2,$ one of Loudoun's customers failed to pay his $$1,050$ account and the account was written off. On April $4,$ Year $2,$ this customer paid Loudoun the $$1,050.$

Which of the following correctly states the effect of the adjustment dated December $31,$ Year $1,$ on the financial statements of the Loudoun Corporation?

Balance Sheet Income Statement Statement of Cash Flows

Assets $=$ Liabilities $+$ Stockholders$$ Equity Revenue $$ Expense $=$ Net Income

A$.(3,375)3,375$ NA NA NA NA NA

B$.(3,375)$ NA $(3,375)$ NA $3,375(3,375)$ NA

C$.3,375$ NA $3,375$ NA $(3,375)3,3753,375$ OA

D$.$ NA NA NA NA NA NA NA