Unit 7
Accounting and Finance Foundations Unit 7: Financial Statements 563Financial Statements
Chapter 18
When you record the Allowance for Doubtful Accounts contra account, you should record the amount
under the Current Assets section of the balance sheet and deduct the accumulated amount for accounts
receivable. You could illustrate this on the balance sheet as follows:ABC Company
Balance Sheet
December 31, 20XX
(in thousands of dollars)Assets
Current Assets
Cash $2,000
Accounts Receivable 7,500
Less: Allowance for Doubtful Accounts (1,250)
Short-term Investments 5,000
Product Inventory 125,000
Prepaid Rent 350Property, Plant, & Equipment
Office Equipment 3,000
Less: Accumulated Depreciation (2,500)Total Assets $139,100LiabilitiesCurrent Liabilities
Accounts Payable $1,789Long-term Liabilities
Long-term Notes Payable 135,000Total Liabilities 136,789Stockholder’s EquityRetained Earnings 2,311Total Stockholder’s Equity 2,311Total Liabilities & Stockholder’s Equity $139,1002.3.9Lesson 18.3Student Guide
The Balance Sheet (cont’d)