The company will recognize $11,232 in the contra-asset account, allowance for doubtful accounts. The entry to increase the allowance account in anticipation of bad debt is as follows: ...

Allowance Method. Using this method, a business-usually one that has a significant amount of accounts unpaid-will anticipate that some accounts receivable will not be paid.

The Federal Accounting Standards Advisory Board staff has released a technical bulletin in an effort to clarify the loss allowance standards for accounts receivable and related recognition standards ...