Cash, Cash Equivalents and Receivables

Aging method of accounts receivable/Uncollectible accounts

What is the aging method? – Explanation The aging method is based on determining the desired balance in the account Allowance for Uncollectible Accounts. The accountant attempts to estimate what percentage of outstanding receivables at year-end will ultimately not be collected; ‘this amount becomes the desired ending balance in the Allowance for Uncollectible Accounts, and …

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Recording uncollectible accounts expense and bad debts

The risk of extending credit arises from the possibility that the customer will not pay. This risk impacts both the measurement of income and the description of the receivables held by the seller. The accountant’s task involves consideration of these three issues: 1. What is the nature of the loss? 2. When does the loss …

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