Allowance for Doubtful Accounts Receivable

Estimating Allowance for Doubtful Accounts Receivable

If your business sells on credit terms to customers then there will be amounts owing to your business represented by accounts receivable in the balance sheet.

Normally customers will pay, however no matter how careful you are with credit checks, there will always be occasions where the customer will fail to pay and the accounts receivable will not be collectible.

In order to allow for this happening, an allowance for doubtful accounts receivable journal entry is made in the accounting records. The allowance for doubtful accounts receivable will either be based on a percentage of the credit sales of the business based on past experience (income statement approach), or it can be estimated by aging the accounts receivable and estimating which amounts are unlikely to be recovered (balance sheet approach).

For further information on allowance for doubtful accounts on the balance sheet see our tutorials on the allowance method or

Learn a new bookkeeping term

Random bookkeeping terms for you to discover.

Link to this page

Click in the box and paste the link to your site.

Return to the Dictionary

Allowance for Doubtful Accounts Receivable June 14th, 2017Team

You May Also Like

Related pages

what is a contra assetaccounting break even calculatorpetty cash analysis sheetaccounting for uncollectible accountsexample of accrued expenseseup accountingexcel pmtaccounting transpositionaccounts receivable turnover ratio measuresannuity pv calculatoradjusting accounting entriesasset liabilitiesincome statement periodic inventory systemdiscount rate irrbeginning stockholders equity formulagearing calculationcalculating gp percentagefob destination freight prepaidinterest coverage ratio calculatormanufacturing overheadsoverhead expense allocationdeclining depreciation calculatoradjusting journal entries accountingtotal contribution margin at the break-even pointmonthly bookkeeping templateincome tax provision journal entryprojected balance sheet template excelclosing entries in accountingapportionment calculatorgoods receipt notecalculate present value of annuity in excelstock turnover ratio formula exampleactual normal and standard costingamortised cost calculationleverage ratio formulasimple expenses claim form templategoods receipt notepetty cash expenses examplelifo method formulameaning of accrued revenuedepreciation double decliningledger book formatbank loan accounting entrieswhat is beginning inventorywhat is a cash floataccounts receivable working capitalcalculating lifopaid salaries to employees journal entryexpense accrualsexcel accounting tutorial pdfwhat are subsidiary journalsfv of annuity duedebit and credit entries in accountsbonds payable balance sheetaccounting irrbank reconciliation statement journal entrieshow to calculate reorder pointpurchase ledgersincome summary closing entriestreatment of prepaid expensesaccounting equation pdfliquidity ratio formulapay back period calculationaccrual adjusting entrieshow to estimate salvage valuewhat is a contra assettemplate balance sheet and income statementhow to calculate cvpretaining earnings formulapresent value of a perpetuity calculatorno coupon bondgearing ratio analysisfuture value of annuity formulapv annuity due calculatorcost of good sold formula manufacturing