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When a company extends credit to its customers, the company realizes it will not likely collect all of the related accounts receivable. As some accounts may prove to be uncollectible, a company must estimate its bad debt expense.
Required:
a.What is the purpose of estimating bad debt expense?
b.There are two relationships that can be used to estimate the bad debt expense for a company. Describe the two major relationships that can be used to estimate bad debts expense and the financial statement orientation of each.
Sedimentary Clasts
Pieces of rock or mineral fragments that are transported and deposited by wind, water, or ice, then compacted and cemented into sedimentary rock.
Breccia
A type of rock composed of broken fragments of minerals or rocks cemented together by a fine-grained matrix.
Conglomerate
A sedimentary rock composed of rounded clasts of varying sizes cemented together by a matrix.
Shale
A fine-grained clastic sedimentary rock formed by the consolidation of clay and other fine-grained material.
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