Does estimating the allowance for doubtful accounts distorts gross income?

label Accounting
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Even though the direct write-off method is not acceptable for generally accepted accounting principles (GAAP) reporting. Propose an alternative method to increase the accuracy of reporting. Explain your rationale.

Dec 6th, 2014

direct write-off method is not acceptable for generally accepted accounting principles.

Alternatively you can do the following

            Take the Debit balance of Bad Debts from the Trial balance              XXXXXXX    

                                                       Add: New Bad Debts  (adjustments)                  XXXXX 

                                       Add: New Provision or Reserve  (adjustments)               XXXXX

                                        Add: New Discount on Debtors  (adjustments)                XXXXX

Less: Credit balance of Old Provision or Reserve from the Trial balance          XXXXX

                        Final Amount that should be entered in Dr side of P/L A/c.             XXXXX


Dec 6th, 2014

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Dec 6th, 2014
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