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

Question

Quizplus · Accepted Answer

The entry to record the estimated bad debts reduces net income because it is an expense that is recognized in the period in which the sale was made. This expense reduces the amount of revenue earned, which leads to a decrease in net income. The entry has no effect on total assets because the allowance for doubtful accounts (the contra asset account used to record the estimated bad debts) is already included in the total assets.

Under the Allowance Method for Estimating Uncollectible Accounts,the Entry to Record