Assume you are the controller of a manufacturing plant that sells light machinery to businesses in the

Question:

Assume you are the controller of a manufacturing plant that sells light machinery to businesses in the surrounding area. You are currently training new employees, and in a recent training session, you report that total credit sales for the year is $300,000, total $40,000 less a $2,000 allowance for bad debts, and bad debt expense is $3,500. After the session, a trainee approaches somewhat confused about why bad debt expense and the allowance balance differ.
Required
Prepare a written explanation to the trainee on the difference between bad debt expense and the allowance for bad debts.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...