Alderwood Company has provided the following information prior to any year-end bad debt adjustment:

Cash sales, $460,000
Credit sales, $1,380,000
Selling and administrative expenses, $360,000
Sales returns and allowances, $120,000
Gross profit, $1,500,000
Accounts receivable, $360,000
Sales discounts, $72,000
Allowance for doubtful accounts credit balance, $4,000

Alderwood estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. How much is Alderwood's bad debt expense?

Answer Choice

$24,700.

$20,700.

$16,700.

$24,250.