a. Investments c. Property, plant and equipment d. Intangible assets e. Other assets f. Current liabilities g. Non-current liabilities h. Capital stock i. These estimates are often based on the company's past experiences. Bonds payable would be classified as: a. E. None of these. The provision for doubtful-debts is provided because of the rationale that the actual amount of bad-debts will only be known in the next year, when the amount of debtors will get realised. The allowance is established in the same accounting period as the original sale, with an offset to bad debt expense. This 80%/20% ratio is used throughout business. If your companys bad debt exceeds the original estimate, youll be required to list it as a bad debt expense on your income statement. a. Investments c. Property, plant and equipment d. Intangible assets e. Other assets f. Current liabilities g. Non-current liabilities h. Capital stock i. In case it appears in the trial balance the above-mentioned treatment has to be followed however, in case it appears as an adjustment entry then it will be recorded on the credit side of the profit and loss a/c as well as on the liabilities side of the balance sheet. Additional paid-in, a. Current assets b. c. listed after property, plant, and equipment. Classify it as a current asset, a current liability, an expense, a fixed asset, a long-term debt, a revenue, or a stockholders' equity account. What Is an Allowance for Doubtful Accounts? Inventory accounts are classified in which section of the balance sheet? The Allowance for Doubtful Accounts account is a contra asset. To keep your financial statements accurate, its helpful to create an allowance for doubtful accounts. Therefore, it can assign this fixed percentage to its total accounts receivable balance since more often than not, it will approximately be close to this amount. e. Contra liability. C. a liquidity-based balance sheet. Classify the Notes Receivable account as one of the following. The purpose of the allowance for doubtful accounts is to estimate how many customers out of the 100 will not pay the full amount they owe. a. cash b. common stock c. equipment d. notes payable e. retained earnings f. accounts receivable, Allowance for Uncollectible Accounts is classified as [{Blank}]. Consider the following balance sheet item: Accounts Payable. Remember that the allowance for doubtful accounts is just an estimate. a. Intangible assets are a. listed directly under current assets on the balance sheet. All course content is delivered in written English. Updated Aug. 5, 2022 - First published on May 18, 2022. Current assets b. Therefore, the company will report an allowance of $1,900 (($70,000 * 1%) + ($30,000 * 4%)). Bad debt expense is estimated at 1/4 of 1% of sales. Retained earnings, Watercooler's March 31, 2012, budgeted balance sheet follows: Budgeted balance sheet March 31, 2012 Current assets: Cash $20,000 Accounts receivable $32,000 Inventory 30,000 Prepaid insurance 1,600 Total current assets $83,600 Plant assets: Equipment, Goodwill would be classified as: a.