Uncollectible accounts: balance sheet approach vs. income statement approach
Not what you're looking for?
Please help with the following problem.
In making the annual adjusting entry for uncollectible accounts, a company may utilize a balance sheet approach to make the estimate, or it may use an income statement approach. Explain these two alternative approaches.
Purchase this Solution
Solution Summary
The following posting helps with financial statements. The solution explains the two methods for allowing for doubtful accounts together with a sample of the entries which would be required.
Solution Preview
Problem: In making the annual adjusting entry for uncollectible accounts, a company may utilize a balance sheet approach to make the estimate, or it may use an income statement approach. Explain these two alternative approaches
Answer:
Accounting for Un-collectible Accounts:
Allowance Method: - recording collection losses on the basis of estimates. There are two methods that can be used to estimate the Un-collectible Accounts expense:
(1) Percent of Sales - referred to as the Income Statement approach because it computes the un-collectible accounts expense as a percentage of net ...
Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Introduction to Finance
This quiz test introductory finance topics.