Wellington Corp. has outstanding accounts receivable totaling €2.54 million as of December 31 and sales on credit during the year of €12.8 million. There is also a debit balance of €6,000 in the allowance for doubtful accounts. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?

a. € 25,400

b. € 31,400

(c.) €122,000

d. €134,000

MY QUESTION IS why doesn't this question account for this highlighted text in the slide?

Bases Used for Allowance Method Two Bases Used for Estimating Allowance Amount 1- Percentage of Sales approach: . Focus on "Bad debt expense" estimate, existing balance in the allowance account is ignored. Method achieves a matching of cost and revenues. 2- Percentage of Receivables approach: Accurate valuation of receivables on the balance sheet. Method may also be applied using an aging schedule. Existing balance in allowance account considered.