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. Aging of receivables method: A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method. To journalize: The transactions of SHM Center.
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. Aging of receivables method: A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method. To journalize: The transactions of SHM Center.
Solution Summary: The author explains the allowance method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of period.
Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.
Chapter 8, Problem 8.35BP
(1)
To determine
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.
Aging of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.
To journalize: The transactions of SHM Center.
(2)
To determine
To open and post: The above entries in allowance for bad debts T-account.
(3)
To determine
To show: The way of reporting accounts receivable on the balance sheet of SHM Center as at December 31, 2016.
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