MGMT 20000 Lecture Notes - Lecture 14: Matching Principle, Accounting Equation, Accounts Receivable

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Bad debt expense: accounts receivable x % of uncollected accounts. Matching principle: bad debt expense recorded in same period as related revenue (sales) Record estimated uncollectible accounts as a contra asset account. The aging schedule estimates uncollectible accounts of million. Cotswolds, inc. estimates uncollectible accounts based on the percentage of accounts receivable. It"s a reduction of equity because they are not receiving as much money as they were expecting, so it"s a reduction of assets too. The allowance for uncollectible accounts is similar to accumulated. The allowance for uncollectible accounts is similar to accumulated depreciation in that it represents the total of all accounts written off over the years. Represents an estimate of bad debts for accounts. A company"s accounts receivable balance at its dec. 31 year-end is ,000, and its allowance for doubtful accounts has a credit balance of before year-end adjustment. It estimates that 4% of outstanding accounts receivable are uncollectible.

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