Describe the two allowance methods used to estimate the amount of bad debts expense that appears on
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Describe the two allowance methods used to estimate the amount of bad debts expense that appears on the income statement.
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Bad debts expense in the allowance method can be estimated two different ways The percentage of sales method estimates the periods bad debts expense by taking a percentage of the periods net credit sales The accounts receivable method requires the company to estimate the amount of the year end balance of accounts receivable it believes will not be collected This estimate should be the year end balance in the allowance account The difference between the balance in the Allowance account prior to adjustment if positive and the estimate ...View the full answer
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Related Book For
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers
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