Question

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 allowance for doubtful accounts at the beginning of the year was $49,910 (credit). during the year, accounts in the total amount of $51,232 were written off.
required:

1. determine bad debt expense.

$13,205
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1. the aging method attempts to estimate the ending balance in the allowance for doubtful accounts.
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 $13,205
allowance for doubtful accounts $13,205
(record adjusting entry for bad debt expense estimate)
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• check my work

1. the aging method attempts to estimate the ending balance in the allowance for doubtful accounts.
2. if glencoe had written off $76,000 of receivables as uncollectible during the year, how much would bad debt expense reported on the income statement have changed?

Explanation:

Step1: Calculate desired ending allowance

The sum of the amounts calculated for each age - category of accounts receivable gives the desired ending balance in the Allowance for Doubtful Accounts, which is $11,883$.

Step2: Determine the bad - debt expense formula

The formula for bad - debt expense using the aging method is Bad Debt Expense=Desired Ending Allowance - Beginning Allowance+Accounts Written Off.

Step3: Substitute the values

The beginning allowance was $49,910$ (credit), and accounts written off were $51,232$.
Bad Debt Expense = $11,883-(49,910)+51,232$
$=11,883 + 51,232-49,910$
$=13,205$

Step4: Journal entry for bad - debt expense

The journal entry to record bad - debt expense debits Bad Debt Expense and credits Allowance for Doubtful Accounts for the amount of bad - debt expense. So, the entry is:
Debit: Bad Debt Expense $13,205$
Credit: Allowance for Doubtful Accounts $13,205$

Step5: Calculate change in bad - debt expense for new write - off amount

If $76,000$ of receivables were written off instead of $51,232$, the new bad - debt expense would be Bad Debt Expense = $11,883-(49,910)+76,000$
$=11,883+76,000 - 49,910$
$=37,973$
The original bad - debt expense was $13,205$. The change in bad - debt expense = $37,973 - 13,205=24,768$

Answer:

1. $13,205$
2. Debit: Bad Debt Expense $13,205$; Credit: Allowance for Doubtful Accounts $13,205$
3. $24,768$