Question

As of December 31, Frappe Company has a balance of $5,000 in accounts receivable. Of this amount, $500 is past due and the remainder is not yet due. Frappe has a credit balance of $45 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 1% 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 $95

B) Credit of $95

C) Debit of $50

D) Credit of $50

Answer

This answer is hidden. It contains 676 characters.