Asked by Ryan Makhanlall on Jun 16, 2024
Verified
The accounts receivable method to estimate bad debts obtains the estimated balance in the Allowance for Doubtful Accounts in one of two ways: (1)computing the percent uncollectible from the total accounts receivable or (2)aging accounts receivable.
Accounts Receivable Method
A technique for estimating the amount of uncollectible accounts receivable and setting aside an allowance for bad debts, reflecting more accurate financial statements.
Allowance for Doubtful Accounts
A contra asset account that reduces the total receivables on the balance sheet by the amount estimated to be uncollectible.
Aging Accounts Receivable
A method of categorizing accounts receivable based on how long an invoice has been outstanding, used to identify potential bad debts.
- Employ the method based on a percentage of sales along with the aging method for accounts receivable to predict doubtful debts.
Verified Answer
Learning Objectives
- Employ the method based on a percentage of sales along with the aging method for accounts receivable to predict doubtful debts.
Related questions
The Aging of Accounts Receivable Method Involves Classifying Each Account ...
A Company Using the Percentage of Sales Method for Estimating ...
A Company Has $80,000 in Outstanding Accounts Receivable and It ...
A Company Using the Percentage of Sales Method for Estimating ...
Installment Accounts Receivable Is Another Name for Aging of Accounts ...