If at the end of its first accounting period a company estimates that

If at the end of its first accounting period a company estimates that

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
If at the end of its first accounting period a company estimates that $5,000 in accounts receivable will  become uncollectible, the necessary adjusting entry debits bad debts expense for $5,000 and credits  allowance for bad debts for $5,000. After the entry shown above is made, the accounts receivable subsidiary ledger still shows the full  amount each customer owes, the balance of the control account (accounts receivable) agrees with 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the total balance in the subsidiary ledger, the credit balance in the contra asset account (allowance for bad debts) can be subtracted from the debit balance in accounts receivable to show the net realizable value of accounts receivable, and a reasonable estimate of bad debts expense is recognized in the appropriate accounting period....
View Full Document

This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Ask a homework question - tutors are online