Under the Allowance Method Bad Debt Expense is Recorded
Under the Allowance Method / Approach , the estimated amount of Bad Debt Expense is recorded by considering the estimated amount of unpaid invoices either by using the percentage of sales method ( Income Statement-Approach ) or percentage of receivables method or aging of Receivables ( Balance Sheet-Approach ) that will be probably not recovered or collected from customers or receivables in future. The company also follows Matching Principle Gaap ( Generally Accepted Accounting Principles ) by matching estimated bad debt expense with Credit Sales of unpaid invoices for the period. The company records the following Adjusting Entry to estimate Uncollectible Accounts Expense / Doubtful Debts or Estimated amou nt of bad debt expense as shown below: Uncollectible Accounts Expense a/c XXX ...