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Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper. Information related to the two subsidiaries follows. Based on the limited information, which subsidiary is the best candidate for expansion?
Allowance for Doubtful Accounts
A contra-asset account used to estimate and offset the amount of receivables that may not be collected.
Uncollectible Accounts
Accounts receivable that a company does not expect to collect due to customer defaults.
Bad Debt Expense
The estimated amount of credit sales that are not expected to be collected, representing potential loss to the company.
Allowance Method
An accounting technique used to account for bad debts, where estimated uncollectible accounts are expensed, adjusting the accounts receivable balance.
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