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Andy entered a small restaurant and sat on a stool at the lunch counter. Baker entered the restaurant a few moments later and sat down at the lunch counter next to Andy. For no apparent reason, Andy suddenly struck Baker on the side of the head with his fist, knocking Baker to the floor. Baker raised himself from the floor, then seized Andy, and tossed him through the large glass window at the front of the restaurant. Andy was seriously injured and hospitalized as a result of the incident. Baker would not be liable for the injury to Andy, because he had acted in self-defence.
Allowance for Doubtful Accounts
A contra asset account that represents the estimated portion of accounts receivable that may not be collectible.
Allowance Method
An accounting technique used to estimate and account for doubtful accounts receivable and adjust the amount of accounts receivable reported on the balance sheet.
Accounts Receivable
Money owed to a company by its customers for sales or services on credit, considered a current asset on the balance sheet.
Allowance for Doubtful Accounts
A contra-asset account used to estimate and offset the amount of receivables that may not be collected.
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