contra asset, credit
The allowance for doubtful accounts is a reduction to the accounts receivable. This is a contra account, similar to accumulated depreciation.
What kind of an account (asset, liability, etc.) is Allowance for Doubtful Accounts, and is its normal balance a debit or a credit?
Yes allowance for doubtful accounts is shown in balance sheet
Credit
Answer:The allowance for uncollectible accounts is a contra T-account to accounts receivable. Both are presented under current assets. The allowance can also be subtracted from accounts receivables, showing the net value (common for listed companies).
The allowance for doubtful accounts is a reduction to the accounts receivable. This is a contra account, similar to accumulated depreciation.
What kind of an account (asset, liability, etc.) is Allowance for Doubtful Accounts, and is its normal balance a debit or a credit?
Yes allowance for doubtful accounts is shown in balance sheet
Asset Contra account to Accounts Receivable (Contra-Asset). Normal balance is credit.
Credit
balance sheet
Answer:The allowance for uncollectible accounts is a contra T-account to accounts receivable. Both are presented under current assets. The allowance can also be subtracted from accounts receivables, showing the net value (common for listed companies).
current asset
Allowance Method
Net Accounts Receivable is found by subtracting the "noncollectable" amount in AR from the balance. Also referred to sometimes as ADA (allowance for doubtful accounts).
total estimated uncollectible accounts as of the end of the year
If you started the period with 10,000 in A/R with a 1,000 allowance for bad debts (10%) and then determined that 5% was an adequate allowance but A/R at the end of the period was 50,000, you would still have to increase your allowance by 1,500 to a balance of 2,500.