Phantom Inc. has an unadjusted debit balance of $5,250 in its Allowance for Doubtful Accounts. The company has experienced bad debt losses of 2% of credit sales in prior periods. Phantom reported net credit sales of $2,250,000 for the current period. To record the potential bad debts, Phantom would debit:

Multiple Choice

Allowance for Doubtful Accounts for $45,000.

Allowance for Doubtful Accounts for $50,250.

Bad Debt Expense for $50,250.

Bad Debt Expense for $45,000.