stegosaurus corp. made sales of 200,000.00 during May and had an ending AR balance of 500,000.00. The

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Question:

stegosaurus corp. made sales of 200,000.00 during May and had an ending AR balance of 500,000.00. The credit balance in the allowance account was 10,000.00. The firm estimates that 8% of its receivables will be uncollectible. What is the entry required to bring the allowance account to its desired balance ?

a) credit of 30,000.00

b) debit of 40,000.00

c) credit of 40,000.00

d) debit of 30,000.00