Asked by Caden Coulson on May 09, 2024
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Under the allowance method, the entry to record a specific uncollectible account write off is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable for the specific customer.
Allowance Method
An accounting technique used to estimate and account for doubtful debts, reducing accounts receivable to a more realistic value.
Allowance for Doubtful Accounts
A contra-asset account that reduces the total receivables reported on the balance sheet to reflect the amount expected to be uncollectible.
Accounts Receivable
Money owed to a company by its customers for goods or services sold on credit.
- Determine the accounting entries linked with the removal of receivables, the collection of amounts on accounts once written off, and the management of bad debt expenses and recoveries.
- Understand the impact of the allowance for doubtful accounts on determining the net realizable value of accounts receivable.
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Learning Objectives
- Determine the accounting entries linked with the removal of receivables, the collection of amounts on accounts once written off, and the management of bad debt expenses and recoveries.
- Understand the impact of the allowance for doubtful accounts on determining the net realizable value of accounts receivable.
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