Estimating Bad Debts
2 Methods of Estimating Uncollectible accounts. Companies must be careful to use good estimation procedures to determine the uncollectible accounts.
These estimates focus on an examination of the outstanding receivables at year-end to determine their collectability.
We will discuss 2 balance sheet approach for estimating uncollectible accounts:
1. As a Percentage of Total Receivables.
2. Aging Accounts Receivable.
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