Question

When using the analysis of receivables method for estimating uncollectible receivables, the amount computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry.A. True.B. False

Answer 1

Answer:

A) True

Explanation:

When you use the analysis of receivables method for estimating uncollectible receivables you will use the age of the accounts receivables in order to determine whether or not they should be considered bad debt. Usually the company establishes a threshold, e.g. 6 months, and all the accounts receivables that have not been collected by that threshold are classified as estimated bad debt.

Under this method, estimated bad debts should equal the adjusted balance for allowance of doubtful accounts.