Under the allowance method for estimating uncollectible accounts, the entry to record the estimated bad debts:

Question

Quizplus · Accepted Answer

Recording the estimated bad debts under the allowance method requires setting aside an amount to account for future losses. This reduces the net income because it is an expense item. It has no direct effect on total assets since the amount is already accounted for in the accounts receivable balance.

Under the Allowance Method for Estimating Uncollectible Accounts, the Entry