Bad Debt Expense: Aging Method Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year. Allowance Required $1,553 475 3,250 2,560 1,525 2,520 $11,883 The balance in Glencoe allowance for doubtful accounts at the beginning of the year was $50,280 (credit). During year, accounts in the total amount of $51,232 were written off. Required: Accounts Receivable Age Current 1-30 days past due 31-45 days past due 46-90 days past due 91-135 days past due Over 135 days past due Amount $310,500 47,500 25,000 12,800 6,100 4,200 1. Determine bad debt expense. 12,835 Proportion Expected to Default 0.005 0.01 0.13 0.20 0.25 0.60 2. Prepare the journal entry to record bad debt expense. If an amount box does not require an entry, leave it blank Bad Debt Expense Allowance for Doubtful Accounts 12,835 I 12,835

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A: The answer is provided as follows:

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Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.  

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.