Fine Linen Service began operations on January 28, 2014. The company does not establish an allowance for doubtful accounts. It simply recognizes a bad debt expense when an account is deemed un-collectible. The company has written off the following items over the past five years:

July 6, 2014 Wrote off $10,000 as un-collectible from a sale made on March 1, 2014.
Feb. 3, 2015 Wrote off $50,000 as un-collectible from a sale made on October 28, 2014.
Mar. 11, 2016 Wrote off $25,000 as un-collectible from a sale made on December 20, 2014 ($12,000) and a sale made on May 10, 2014 ($13,000).
Mar. 24, 2016 Recovered $5,000 that had been written off on February 3, 2015. It is company policy to credit bad debt expense when an account is recovered.
Aug. 8, 2017 Wrote off $75,000 as un-collectible from sales made in 2014 ($20,000), in 2015 ($25,000), and in 2016 ($30,000).
Dec. 2, 2017 Wrote off $5,000 as un-collectible from a sale made on April 26, 2017.
Sept. 19, 2018 Wrote off $90,000 as un-collectible from sales in 2014 ($5,000), in 2015 ($30,000), in 2016 ($25,000), in 2017 ($20,000), and in 2018 ($10,000).
Over the period 2014 to 2018, Fine Linen Service realized the following sales and reported the following ending balances in accounts receivable.

At the beginning of operations, a consultant had informed Fine Linen Service that the company should expect not to collect 8 percent of total sales.

REQUIRED:
a. List the bad debt expense and the balance sheet value of accounts receivable for each year over the five year period under both Fine Linen€™s current method and the allowance method. Use the following format:

b. Compute the total bad debt expense over the five-year period under the two methods. Why is the allowance method preferred to Fine Linen€™s current method?

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Sales Accounts Receivable $ 950,000 $1,000,000 2014 2015 975,000 900,000 2016 1,025,000 1,200,000 2017 1,032,000 1,175,000 990,000 2018 1,095,000 2016 2017 2014 2015 2018 Current method: Bad debt expense Accounts receivable value Allowance method: Bad debt expense Accounts receivable value