Answer:
The answer is C.
Explanation:
Credit sales is $6,000
Bad debt is 3% of net credit sales which is $180($6,000 x3%)
Creating allowance for doubtful debt entry is one of the prudent method and it tells us that some customers won't pay part of what they are owing. And it is also a contra account that offset bad debt.
According to the accounting rule, debit increases asset and expenses and vice-versa while credit decreases liability, equity, income and vice versa.
So we have have:
Dr Bad debt expense $180
Cr Allowance for Doubtful Accounts $180
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