A business keeps a provision for doubtful debts equal to 5% of trade receivables. The balance in the provision for doubtful debts account on 31 December 2018 was $2700. By 31 December 2019, trade receivables had risen to $50000. How is the provision for doubtful debts to be recorded on 31 December 2019?
- Acredit $200; added to gross profit $200
- Bcredit $200; deducted from gross profit $200
- Cdebit $200; added to gross profit $200
- Ddebit $200; deducted from gross profit $200