Question

Siemens is one of the world's largest electrical engineering and electronics companies. Headquartered in Germany, the company has been in business for over 160 years and operates in 190 countries. In a recent annual report, it disclosed the following information concerning its allowance for doubtful accounts (euros in millions denoted as ? ):
Required:
(b) If Siemens had written off an additional ? 10 million of accounts receivable during the period, how would receivables, net, and net income have been affected? Explain why.

Answer 1

The summary journal entries related to the allowance for doubtful accounts for the current year is

No Transaction General Journal Debit Credit

1 B Allowance for doubtful accounts 120  

   Accounts receivable   120

Terrible debt, once in a while known as uncollectible bills cost, is a financial quantity owed to a creditor that is unlikely to be paid and for which the creditor isn't inclined to do so to collect.

A doubtful account or doubtful debt is an account receivable that could grow to be a bad debt at some unspecified time in the future in the future. If customers purchase on credit, organizing an allowance of dubious debts is a vital device for your stability sheet and earnings statement.

Doubtful accounts are an asset. the amount is pondered on a company's balance sheet as “Allowance For dubious bills”, in the belongings section, directly under the “debts Receivable” line item. doubtful money owed is considered to be a contra account, which means an account that displays a zero or credit balance.

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