Question

the allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $877 of accounts receivable are uncollectible. allowance for doubtful accounts has a debit balance of $174. the adjusting entry at the end of the year will include a credit to allowance for doubtful accounts in the amount of

Answer 1

The receivable balance in each of the aging categories is multiplied by a reserve rate to determine the allowance for uncollectible accounts (see table below). Older receivables have a greater reserve rate since there is a lower likelihood that they will be recovered.

Which two techniques are used to estimate the provision for uncollectible receivables?

The two most popular methods for estimating uncollectible accounts are the accounts receivable aging approach and the percentage of sales method.

How does writing down uncollectible accounts receivables when utilizing the allowance approach effect the accounts on the?

According to the allowance approach, a written-off account will cause the allowance for doubtful accounts to increase and the net accounts receivable to fall. The net accounts receivable will therefore stay the same.

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