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Using the aging approach management estimates that 10% of the $10,000 of Accounts Receivable will be uncollectible. The Allowance for Doubtful Accounts has a $100 unadjusted credit balance. After the bad debt adjusting entry is recorded, Bad Debt Expense on the income statement will be the same amount as $10,000 the Allowance for Doubtful Accounts on the balance sheet.
What is Accounts Receivable?
Accounts receivable are the funds that customers owe your company for products or services that have been invoiced. The total value of all accounts receivable is listed on the balance sheet as current assets and include invoices that clients owe for items or work performed for them on credit.
How do you record Bad Debt Expense?
To record the bad debt expenses, you must debit bad debt expense and a credit allowance for doubtful accounts. With the write-off method, there is no contra asset account to record bad debt expenses. Therefore, the entire balance in accounts receivable will be reported as a current asset on the balance sheet.
Learn more about Bad Debt Expense on:
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