In this lesson, Nick Palazzolo, CPA, breaks down the process of managing bad debt expense, an essential area of accounting that involves estimating and adjusting for uncollectible accounts. Starting with the provision for bad debts and the necessary adjustments made at year-end, Nick guides through the journal entries associated with writing off specific accounts receivable using the allowance method. He offers a hands-on example that demonstrates how to adjust the allowance for doubtful accounts to reach the correct net accounts receivable on the balance sheet. Additionally, Nick illuminates what happens when accounts previously written off are subsequently collected, covering the reversing entries under both the direct write-off and the allowance methods. This thorough walk-through clarifies the intricacies of accounting for bad debts, ensuring a firm grasp of these crucial journal entries.
Lesson: Bad Debt Expense
In this lesson, Nick Palazzolo, CPA, breaks down the process of managing bad debt expense, an essential area of accounting that involves estimating and adjusting for uncollectible accounts. Starting with the provision for bad debts and the necessary adjustments made at year-end, Nick guides through the journal entries associated with writing off specific accounts receivable using the allowance method. He offers a hands-on example that demonstrates how to adjust the allowance for doubtful accounts to reach the correct net accounts receivable on the balance sheet. Additionally, Nick illuminates what happens when accounts previously written off are subsequently collected, covering the reversing entries under both the direct write-off and the allowance methods. This thorough walk-through clarifies the intricacies of accounting for bad debts, ensuring a firm grasp of these crucial journal entries.
Updated: Oct. 20, 2021 Create an account