xercise 5-4 Bad Debt Expense: Aging Method Glencoe Supply had the following acco

Question

xercise 5-4 Bad Debt Expense: Aging Method Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year. Accounts Proportion Expected Allowance Receivable Age Required to Default Amount 0.005 1,553 Current $310,500 1-30 days past due 47,500 0.01 475 25,000 31-45 days past due 3,250 0.13 46-90 days past due 12,800 0.20 2,560 6,100 91-135 days past due 1,525 0.25 Over 135 days past due 4,200 0.60 2,520 $11,883 The balance in Glencoe's allowance for doubtful accounts at the beginning of the year was S58,620 (credit). During the year, accounts in the total amount of S62,400 were written off. Required l. Determine bad debt expense. 2. Prepare the journal entry to record bad debt expense 3. By how much would bad debt expense reported on the income statement have changed if Glencoe had written off $90,000 of receivables as uncollectible during the year? OBJI

Explanation / Answer

Please note that $11883 should be the closing credit balance at the end of the year

Opening balance= $58620 cr

Less- Closing balance should be =$11883

Balance Need to be adjusted with bad debt account=(58620-11883)=$46737

Journal entry will be -

Allowance for doubtful account Dr.$46737

Bad Debt Expenses Cr $46737

Journal entry for during the year bad debt written off $62400

Bad Debt A/c Dr $62400

Accounts Receivable Cr.$62400

So Bad debt expenses during the year =(62400-46737)=$15663

How Much would bad debts expenses reported on the income statement have changed if Glencoe had written off $90000 of receivable as uncollectible during the year-

=(90000-46737)=$43263

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