Intro to the Allowance Method and Uncollectible Accounts (Financial Accounting Tutorial #41)

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So up until now we have talked about merchandise inventory and sales made on account. Well what happens when we have a sale that becomes uncollectible and a receivable that becomes impaired/not able to be collected? The allowance method is meant to be used so that we have smooth earnings and to record the correct value for receivables within our company. Its basically a method that provides conservative numbers and consistent results/smooth earnings! We'll talk about the sales method and the receivables method in later videos as they are 2 ways in which we can account for the allowance method!
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[@ayannacharris]

Thank you!!!!!!

[@madmeek008]

This hardly touched upon the allowance method

[@sun22moon]

Thanks :)

[@zeinabadam8200]

please explain how the two graph in year one and two are moving upward since there was bad debt .is not that will reflect in the change of the net income for year 2?

[@zeinabadam8200]

***** got it thank you

[@MrXdeathkidreaperx]

Are you a student or are you a certified CPA or just a accountant? I love your videos btw.