Chapter 8, Problem 8.20E

(1)

To determine

Allowance method

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for bad debts account.

Aging of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

To journalize: The year-end adjusting entry for bad debts, on the basis of aging schedule.

(2)

To determine

To show: The way of reporting accounts receivable on the balance sheet as at December 31, 2018.