E9-20 Accounting for uncollectible accounts using the allowance method (aging-of-receivables) and reporting receivables on the balance...

E9-20 Accounting for uncollectible accounts using the allowance method (aging-of-receivables) and reporting receivables on the balance sheet

Expert Solution

Allowance method (Aging of receivables ) , in this method of accounint the firm will make the provission on the basis of his
past expreiances on uncollectable amount. In this method we can make a provission of the uncollectable account and debit
the expenses with same amount and create a liability for the same.

So, This amount of uncollectable will be presented in balance sheet as below,

	Account Receivable	XXXX
	Less: Allowance for Doubtfull Debts	XXXX
	Net Account Receivables	XXXX


	Example :

	Below is example of recording of allwance for doubtfull accont

	CALCULATION OF PROVISION OF BAD DEBTS FOR THE YEAR END
	Age Group	Account Receivable	X by % uncollectable	Estimated Uncollectable
	Not Due Yet	XXXX	XXXX	XXXX
	1 to 30 Days Past Due	XXXX	XXXX	XXXX
	31 to 60 Days Past Due	XXXX	XXXX	XXXX
	61 to 90 Days Past Due	XXXX	XXXX	XXXX
	Over 90 Days Past Due	XXXX	XXXX	XXXX

	Total			XXXX



Journal Entries
Date	Account Title and explanation	Debit	Credit

	Bad Debt Expenses	XXXXXX
	To Allowance for Doubtful Debts		XXXXXX

ekkarill92 answered 2 years ago

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