If A Company Fails To Record Estimated Bad Debts Expense Or Uncollectible Accounts Expense
If a firm or company fails to record Uncollectible Accounts Expense or Doubtful Debts , then the result is that Credit Sales will be increased / overstated and Expenses will be understated but Revenues will be overstated and hence N et Income / N et Profit shown in the Income Statement / Profit And Loss Account will also be overstated. While it will also affect the Net Relizable Value of Accou nts Receivable on Balance Sheet that will also be overstated. In this case, pass the entry again if the company fails to record complete journal entry i.e. Debit the Uncollectible Expense and Credit the Allowance For Doubtful Accounts / Provision for Doubtful Debts , and deduct Allowance for Doubtful Accounts from Closi n g Bala n ce of Accou nts Receivable on Balance Sheet. You May Also Be I nterested In " What if a Company’s Allowance for Doubtful Accounts is Understated / Overstated " So to rectify this error or mistake, deduct the est...