In: Accounting
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 $49,520 (credit). During the year, accounts in the total amount of $51,232 were written off.
Required:
1. Determine bad debt expense.
2. Prepare the journal entry to record bad debt
expense.
3. If Glencoe had written off $91,000 of receivables as uncollectible during the year, how much would bad debt expense reported on the income statement have changed?