If a company estimates uncollectible accounts based on a percentage of receivables, the resulting estimate will show up on the balance sheet as the ending balance in Allowance for Doubtful Accounts.

Question

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Percent of accounts receivable yields the estimated ending balance in allowance for doubtful accounts, and uncollectible accounts expense is the amount necessary to adjust the allowance to the estimated balance.

If a Company Estimates Uncollectible Accounts Based on a Percentage