Bad Debt Expense: Aging Method
Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year.
Accounts Receivable |
Age
Amount |
Proportion Expected
to Default |
Allowance
Required |
| Current |
$310,500 |
|
0.005 |
|
$1,553 |
|
| 1-30 days past due |
47,500 |
|
0.01 |
|
475 |
|
| 31-45 days past due |
25,000 |
|
0.13 |
|
3,250 |
|
| 46-90 days past due |
12,800 |
|
0.20 |
|
2,560 |
|
| 91-135 days past due |
6,100 |
|
0.25 |
|
1,525 |
|
| 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 $58,620 (credit). During the year, accounts in the total amount of $62,400 were written off.
Required:
1. 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 statement of earnings have changed if Glencoe had written off $90,000 of receivables as uncollectible during the year?