Unformatted text preview: Allowance Method - Suppose Compuport — Knows from experience that it will not collect about
2% of sales — Has sales in 20X1 of $100,000 — Estimates that 2% x $100,000 or $2,000 of the 20X1
sales will be uncollectible — Does not know on December 31, 20X1, which
customers will fail to pay their accounts - Compuport can still acknowledge the $2,000
worth of bad debts in 20x1...
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- Fall '07
- Financial Accounting