On January 1, Xtreme Co. began offering credit with terms of n/30. Uncollectible accounts are estimated to

Question:

On January 1, Xtreme Co. began offering credit with terms of n/30. Uncollectible accounts are estimated to be 1% of credit sales, which is the average for the industry. The CEO, Todd Hurley, has no background in accounting and is struggling to understand the allowance method.
Write a brief memo to Todd explaining the allowance method and how this information is reported in the financial statements.