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Analysis of Bad Debts
Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s gross accounts receivable.The relationship between the allowance and the balance in receivables should be relatively constant unless there is a change in the economy overall or a change in customer base.
Allowance for Doubtful Accounts Receivable
|Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 28, 2014||Dec 29, 2013|
|Selected Financial Data (USD $ in millions)|
|Allowances for doubtful accounts|
|Accounts receivable trade, gross|
|Allowance as a percentage of accounts receivable trade, gross1|
1 Allowance as a percentage of accounts receivable trade, gross = 100 × Allowances for doubtful accounts ÷ Accounts receivable trade, gross
= 100 × ÷ =
|Allowance as a percentage of accounts receivable trade, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||Johnson & Johnson’s allowance as a percentage of accounts receivable trade, gross declined from 2015 to 2016 but then slightly increased from 2016 to 2017.|