However, if the allowance account has a prior balance of $5,000 the journal entry will be as follows: (DR.) Bad Debt Expense 28,000 (CR.) Allowance for Doubtful Accounts 28,000 ...

Allowance for doubtful accounts and accumulated depreciation are the most common contra assets. Here's how they work: Allowance for doubtful accounts is netted from the accounts receivable balance.

For example, if the net credit sales in the first quarter are $1 million and the average gross accounts receivable balance is $400,000, the turnover is 2.5. Advertisement Article continues below ...

Amazon disclosed in its quarterly filing that its allowance for doubtful accounts jumped $400 million last quarter. The balance is an estimate of contracts that Amazon believes its customers won't ...

Even though the accounts receivable is not due in September, the company still has to report credit losses of $4,000 as bad debts expense in its income statement for the month.