[AJE]

What is the difference between these two?
Sales Return Reserve?
Allowance for Doubtful Accounts?
Bad Debt Expense (does it relate to both)??

If someone can write out an example with journal entries of these two that’d be awesome. Also do they have different ASCs?

FAR 91 - 04/16
BEC 87 - 05/15
REG 77 - 07/27
AUD 92 - 08/31

[lam2848]

I think allowance for doubtful accounts is used when you do not expect a portion of your receivable to be received. Sales returns and allowances are used when you expect a certain portion to be returned by the customer. Both I believe will decrease accounts receivable.

Bad debt expense 2,000
Allowance for doubtful accounts 2,000

Sales returns and allowances 5,000
Accounts receivable 5,000

[Ana]

bad debt expense does not relate to sales returns and allowances, only to allowance for doubtful accounts.

[Author]

Replies