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    Intermediate Accounting Theory: Future Bad Debts

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    How is the statement of cash flows using the direct method affected when a company records a sale on credit? Which accounts are affected when a company records an allowance for future bad debts? How is the balance sheet affected when a company records an allowance for future bad debts?

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    Solution Preview

    (1) Accounts receivable increases when we record a sale on credit, consequently Cash In increases and Cash flow positively ...

    Solution Summary

    The solution explains how the statement of cash flows is using the direct method affected when a company records a sale on credit. The accounts affected when a company records an allowance for future bad debts is given. Finally, an analysis of how the balance sheet is affected when a company records an allowance for future bad debts is given.

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