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Anth Company has significant amounts of trade accounts recei

Anth Company has significant amounts of trade accounts receivable. Anth
uses the allowance method to estimate bad debts instead of the specific
write-off method. During the year, some specific accounts were written off
as uncollectible, and some that were previously written off as uncollectible
were collected.
Anth also has some interest-bearing notes receivable for which the face
amount plus interest at the prevailing rate of interest is due at maturity. The
notes were received on July 1, 2004, and are due on June 30, 2006.
Required:
b. What are the two basic allowance methods used to estimate bad debts,
and what is the theoretical justification for each?

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Uncollectible accounts
Anth Company has significant amounts of trade accounts receivable. Anth uses the allowance method to estimate bad debts instead of the specific write-off method. During the year, some specific accounts were written off as uncollectible, and some that were previously written off as uncollectible were collected.
Anth also has some interest-bearing notes ...

Solution Summary

This solution is comprised of a detailed explanation to answer what are the two basic allowance methods used to estimate bad debts, and what is the theoretical justification for each.

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