General
Allowance for Doubtful Accounts (Bad Debt)
Creating a provision for accounts receivable that may not be collected at year-end.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Bad Debt Expense | Expense (+) | 2,500.00 | - |
| Allowance for Doubtful Accounts | Contra-Asset (+) | - | 2,500.00 |
💡 Accountant's Note
This is a key CMA concept. Using the allowance method adheres to the Matching Principle by recording the expense in the same period as the related sale.
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