During the year, Sheldon Company had net credit sales of $40,000. At the end of the year, before adjusting entries, the balance in Accounts Receivable was $11,500 (debit) and the balance in Allowance for Bad Debts was $670 (credit). If the company uses an income statement approach to estimate bad debts at 7%, what is the ending balance in the Allowance for Bad Debts account?
OA. $1,475 OB. $3,470 OC. $2,130 OD. $2,800