SPI Company has the following data for the year ended December 31, Year 1: Sales (credit) Sales returns and allowances $2,500,000 50,000 640,000 Accounts receivable (December 31, Year 1) Allowance for doubtful accounts (before adjustment at December 31, Year 1) 20,000 Estimated amount of uncollected accounts based on aging analysis (December 31, Year 1) 45,000 If the company estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for Year 1? $6,400 $24,500 $25,000 $45,000