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    Bakary's Avatar
    Bakary Posts: 1, Reputation: 1
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    #1

    Mar 10, 2012, 10:29 PM
    Accounts receivable-aging method?
    I am an accountant and I have a little confusion aging method specially WHY THE EXISTING CREDIT BALANCE OF ALLOWANCE ACCOUNT should be deducted from the desired amount of the allowance? For example if the aging method results a bad bebt of $5000 and there was existing credit balance of $100 then, the amount adusting is $4900(5000-100) simply WHY? WHY SHOULDN'T ENTIRE 5000 BE RECORDED?
    sinxinx's Avatar
    sinxinx Posts: 1, Reputation: 1
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    #2

    Oct 16, 2012, 05:20 AM
    Because $5000 is the ending balance of the Allowance account.
    So if the credit side is $100, to put the Allowance balance in balance you have to put $4900 on the debit side.

    So the entry will be;

    Debt exp. Or uncollectible accounts expense $4900
    Allowance uncollectible accounts $4900

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