1. Give an explanation of the concept of bad debt, a definition of the account used to account for bad debt and an explanation of the two methods used (direct writeoff and allowance method). 2. Explain with the following example Assume that Amex uses the aging method. Consider the following accounts for Amex:

Assume that Amex wrote off $100 million during 2017. Please explain to your client the correct amount of bad debt expense recorded for 2017 income statement.

(in Smillions) Gross A/R Allowance for doubtful Accounts 2017 $72,000 637 $71,363 $58,540 442 $58,098