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4#
发表于 2011-7-13 16:32
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freakingout Wrote:
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> Somehow I disagree. You don't reduce AR when
> reserved because you didn't recognize that as AR
> in the 1st place. And I don't understand your 1st
> paragraph. 
Sorry for confusing you.
In the balance sheet Accounts Receivable is always shown as net:
Gross Accounts Receivable - Provision for doubtful debts (PDD) = Net Accounts Receivable.
Now since we are going to reverse the provision, you will be reducing PDD which is going to increase Net A/R. But if you reduce PDD, it has to balance somewhere, and that is going to be equity (it increases) through the I/S (basically a gain).
Then we go to the next step that is decrease Net A/R (since Gross A/R will decrease) and increase cash. |
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