A sole trader holds a provision for doubtful debts equal to $5\%$ of trade receivables. At the beginning of the year, the provision for doubtful debts stood at $2750. By the end of the year, the information given is as follows: trade receivables $37500; irrecoverable debts written off during the year $500. What is the effect on the profit for the year arising from the change in the provision for doubtful debts?
- Adecrease by $875
- Bdecrease by $900
- Cincrease by $875
- Dincrease by $900