As of December 31, Frappe Company has a balance of $14,000 in accounts receivable. Of this amount, $1400 is past due and the remainder is not yet due. Frappe has a credit balance of $135 in the Allowance for Doubtful Accounts. Frappe Company estimates its bad debt losses using the aging of receivables method, with estimated bad debt loss rates equal to 2% of accounts not yet due and 10% of past due accounts. How will the Bad Debt Expense account be included in the required adjusting journal entry at year-end?
A. Debit of $135
B. Credit of $392
C. Debit of $262
D. Debit of $257
Answer: D
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