Question

question content area at the beginning of the year, the balance in allowance for doubtful accounts is a credit of $511. during the year, $309 of previously written off accounts is reinstated and accounts totaling $829 are written off as uncollectible. the end-of-year balance (before adjustment) in allowance for doubtful accounts should be

Answer 1

The balance in the allowance for doubtful accounts for the year ending will be $9 as negative balance.

Given information:

Allowance for doubtful accounts = $511

Reinstated amount = $309

Total uncollectible = $829

Balance in allowance for doubtful accounts = $511+ $309-$829 = ($9)

A counter account called an allowance for doubtful accounts nets against by the total receivables displayed on the income statement to only reflect the amounts anticipated to be paid. The proportion of receivable accounts that are anticipated to be uncollectible is estimated by the allowance for doubtful accounts. Customers' real purchasing habits, however, may be significantly different from the estimate.

The danger of never being paid has always been inherent inside a credit-based deal, regardless of the corporate guidelines and procedures for credit collections. As a consequence, a company must recognize such risk by creating an allowance for doubtful accounts and reducing bad loans expenditure.

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