The journal entry for the Allowance for Doubtful Accounts (ADA) involves debiting Bad Debt Expense (BDE) and crediting Allowance for Doubtful Accounts. This entry reflects an estimation of potential losses from accounts receivable that may not be collected. By recording BDE, which is an expense on the income statement, and increasing ADA, which is a contra-asset account on the balance sheet, the entry adjusts the financial statements to reflect a more accurate valuation of accounts receivable considering the likelihood of non-payment.
Reimagine Your Order-To-Cash with AI
Touchless Receivables. Frictionless Payments.
Recommended Digital Assets for You
Suggested Resources
Emagia Order-To-Cash Analytics OBIEE Solution
Enterprise Digital Assistants: How they can support you in your Credit, Collections and Cash Application Operations
Improving Order-To-Cash Efficiency Using Emagia Analytics
Digital Order-to-Cash: A Roadmap to Collections Automation (Part 2 – Keeping the Customer and Maximizing Cash Flow)
Add AI to Your Order-to-Cash Process
AR Automation for JD EDwards
AR Automation for SAP
AR Automation for Oracle
AR Automation for NetSuite
AR Automation for PeopleSoft
