Purpose of estimating doubtful accounts - helps them to recognize the risks of collecting

payments and to make the financial statements more complete, usually to anticipate events
that have not yet occurred, but which are considered to be probable (most likely to
happen).

Methods of estimating doubtful accounts

Aging accounts receivable(hindi na talaga macocollect) - accounts receivable that cannot
be collected. Ginagamit to pag nag aadjust ng financial statement para maiwasan yung
overstated amount or yung sobra sa expected na amount.
Percent of accounts receivables (expected palang na hindi macocollect) - estimates
uncollectible accounts. Multiply the ending balance in accounts receivable by a rate based
on its uncollectible accounts experience.
Percent of sales - makes financial predictions based on previous and current sales data.
(Nasa book naman mga formula tsaka entries nito )

Correction in allowance for doubtful accounts - nangyayare lang to kapag may mali or may
nagbago sa estimation. Kung sobra yung amount or kulang ganon. Nasa book din entry nito.
Debit balance in allowance account - mangyayare lang to kapag sinabi ng entity na irecord
written off yung mga accounts.
Accounts written off - accounts that are considered uncollectible and removed from the
accounts receivable account.