Compute the required balance of the Allowance for Doubtful Accounts at December 31, using the aging of accounts receivable method.

        For the evaluation bad debt amount the uncollectible probability is multiplied with the amount of account receivable in every category. Through this the amount of bad debt in each category can be easily calculated. The summing up of the bad debt expense of each category results in total bad debt expense (Needles and Powers 2010).

        The total bad debt expense of each category is fixed in the ending balance of the allowance for Doubtful Account. The above table indicates the appropriate journal entry for the bad debt Expense (Needles and Powers 2010).

Reference of the Allowance for Doubtful Accounts at December 31, using the aging of accounts receivable method.

Needles, Belverd E., and Marian Powers. 2010. Financial Accounting . Cengage Learning.