Casilda Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $100,000, (2) up to 60 days past due, $28,000, (3) between 61 days 179 days past due, $6,000, and (4) more than 180 days past due, $2,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3 percent, (2) 12 percent, (3) 30 percent, and (4) 50 percent, respectively. At December 31, 2017 (end of the current year), the Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made.

A. Prepare the appropriate bad debt expense adjusting journal entry for the year 2017 (Show work) B. Explain the reason why the adjusting journal entry is needed at the end of the year 2017.