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

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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 
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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....
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