at the start of the year, habitat for humanity reports gross contributions receivable of $10,000 and a related allowance for bad debts of $2,000. during the year, $7,500 of these receivables are collected and the rest are written off. habitat for humanity records current year contributions of $150,000, of which $120,000 are collected in cash. its ending allowance for bad debts balance should be 20% of uncollected receivables. all of these promises are short-term so habitat for humanity does not discount them to present value.
What is bad debt expense for the current year?
a. $6,500
b. $6,000
c. $5,500
d. $4,000
