Are Estimated Uncollectible Accounts reported n the Income Statement? I think... yes.

Yes, the debit to Uncollectible Accounts Expense brings about a matching of expenses and revenues on the income statement

Thanks Bob!

No, Estimated Uncollectible Accounts are not reported on the Income Statement. Instead, they are reported on the Balance Sheet as a contra-asset account called Allowance for Doubtful Accounts or Allowance for Bad Debts.

To understand why Estimated Uncollectible Accounts are not reported on the Income Statement, we need to look at the two main financial statements: the Income Statement and the Balance Sheet.

The Income Statement shows a company's revenues, expenses, and net income or net loss over a period of time, such as a month, quarter, or year. It helps evaluate a company's profitability.

On the other hand, the Balance Sheet provides a snapshot of a company's financial position at a specific point in time. It includes assets, liabilities, and shareholders' equity. The Balance Sheet shows what a company owns (assets), what it owes (liabilities), and its net worth (shareholders' equity).

The Estimated Uncollectible Accounts represent the portion of accounts receivable that a company expects will not be collected. Since this amount represents a potential loss, it is recorded as a contra-asset on the Balance Sheet. Contra-assets are subtracted from the related asset account to reflect the net realizable value of the asset. In this case, the contra-asset account is the Allowance for Doubtful Accounts.

When recording revenue on the Income Statement, companies anticipate some customers may be unable to pay their outstanding balances. To account for this potential loss, they estimate the amount of uncollectible accounts and create a corresponding allowance on the Balance Sheet. The estimated amount is not reported on the Income Statement but is used to adjust the Accounts Receivable balance on the Balance Sheet, resulting in a more accurate representation of the company's financial position.

So, to summarize, Estimated Uncollectible Accounts are not reported on the Income Statement. Instead, they are reported as a contra-asset account called Allowance for Doubtful Accounts on the Balance Sheet.