Allen Bikes Ltd. has a year-end of December 31, 20x9. During the year, the company wrote off accounts receivable in the amount of $2874. Allens December 31, 20x9 general ledger account balances, prior to making any adjusting journal entries, were as follows:

Accounts receivable $162,000 debit

Allowance for doubtful accounts 507 debit

Sales 2068500 credit

Allen Bikes Ltd. has estimated that bad debts will equal of 1% of sales. What will be the dollar amount of the bad debt expense when making the adjusting journal entry for the year-ended December 31, 20x9?

Select one:

a. $2874

b. $10342

c. $9836

d. $10850