estimate for doubtful accounts

doerit48 · #1 Apr 19, 2008, 07:23 AM

what effect does lowering the estimate for doubtful accounts have on the income statement and/or balance sheet?

MaggieMouse · Apr 21, 2008, 02:51 PM

Here is the entry for recording the estimate-Dr. Expense(income statement a/c), Cr. Allowance(balance sheet a/c)

Lowering the estimate will lower the expense on income statement, which will higher the income.

Also, lowering the estimate will lower the allowance, a contra-asset account on the balance sheet, it will lead to a higher accounts receivable amount, which will higher the asset as a result.



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