Debt becoming bad:
When a debt is deemed to be uncollectible or unlikely to be recovered, it is considered a bad debt. Bad debts occur when a debtor is unable or unwilling to pay their outstanding obligations to the creditor. In financial accounting, it is important to account for bad debts appropriately to reflect the true financial position of a company.

Treatment of bad debts:
To account for bad debts, companies typically follow the allowance method. The allowance method involves estimating and recording an allowance for doubtful accounts. This estimation is based on historical data, industry trends, and the company's past experience with bad debts.

Accounting entry for bad debt:
When a debt becomes bad, the amount should be credited to the trade receivables account. This means that the trade receivables account will be reduced by the amount of the bad debt. The trade receivables account represents the total amount of money owed to the company by its customers for goods or services provided on credit.

Reasons for crediting the trade receivables account:
1. Reflecting the reduction in accounts receivable: Crediting the trade receivables account accurately reflects the reduction in the accounts receivable balance. It helps in presenting a more realistic financial position by recognizing the fact that the company is unlikely to collect the full amount owed.

2. Maintaining accuracy in financial statements: By crediting the trade receivables account, the company ensures that the balance sheet reflects the true value of accounts receivable. It prevents an overstatement of assets, which could mislead investors, creditors, and other stakeholders.

3. Facilitating decision-making: Crediting the trade receivables account allows for better decision-making regarding credit policies, customer relations, and overall financial management. It provides a clear picture of the collectability of outstanding debts and helps in identifying potential risks and areas for improvement.

4. Compliance with accounting standards: Following the generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS), the treatment of bad debts involves reducing the trade receivables account. This ensures compliance with accounting standards and promotes consistency in financial reporting.

Conclusion:
When a debt becomes bad, the amount should be credited to the trade receivables account. This accounting treatment accurately reflects the reduction in accounts receivable, maintains accuracy in financial statements, facilitates decision-making, and ensures compliance with accounting standards. By recognizing bad debts appropriately, companies can present a more realistic financial position and make informed business decisions.

(b)