The Allowance For Doubtful Accounts Is A Contra Asset Account That Equals:

The Allowance For Doubtful Accounts Is A Contra Asset Account That Equals To Total Uncollectible Accounts

Reason: As we know that Allowance For Doubtful Accounts is a Contra Asset Account which is deducted from closing balance of Accounts Receivable on Balance Sheet in order to calculate the Net Realizable Value (NRV) of Accounts Receivable, so mathematically, we can say that:

Net Realizable Value = Accounts Receivable - Allowance For Doubtful Accounts

Net Realizable Value + Allowance For Doubtful Accounts = Accounts Receivable

Allowance For Doubtful Accounts = Accounts Receivable - Net Realizable Value

As Accounts Receivable - Net Realizable Value = Total Uncollectible Accounts

So, we have the following result as shown below:

Allowance For Doubtful Accounts = Total Uncollectible Accounts

So, we can say that Allowance For Doubtful Accounts is equal to Accounts Receivable minus Net Realizable Value of Accounts Receivable which represent total estimated uncollectible accounts.

Example:

Using The Percentage-Of-Receivables Method For Recording Bad Debt Expense, Estimated Uncollectible Accounts Are $45,000. If The Balance Of The Allowance For Doubtful Accounts Is $6,000 Debit Before Adjustment, What Is The Balance After Adjustment?

The estimated uncollectible account is predetermined as $45,000 under aging of accounts receivable method, which is the total of uncollectible accounts’ balance which we expected not to be collected from our customers / clients for the accounting period. So, this is the total uncollectible accounts or total required balance which is expected not to be received from our customers after Adjustment.

So, the balance after adjustment is $45,000.