Question
Asked Dec 16, 2019
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After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $673,400 and Allowance for Doubtful Accounts has a balance of $11,900. Describe how the accounts receivable and the allowance for doubtful accounts are reported on the balance sheet.

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Expert Answer

Step 1

Allowance method

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for bad debts account.

Step 2

Describe the way in which accounts receivable and allowance for doubtful accounts are reported on the balance sheet:

Explanation:

Accounts receivable would be reported under the asset section of the balance sheet. A...

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