Allowance for Doubtful Accounts Method of Uncollectibles Under the allowance method of accounting for uncollectible accounts, bad debt expense is recorded in the same period that revenue is earned not when the balance is deemed uncollectible. This is an adjusting entry at the end of each period to ensure the allowance for doubtful accounts balance is equal to the estimated bad debt expense. Critical thinking: How does recording bad debts each year help improve accuracy of the balance sheet? Bond Pricing The market rate determines how bonds will be sold. When the market rate is greater than the contract rate of the bond, bonds will be sold at a premium DISCOUNT When the market rate is equal to the contract rate of the bond, bonds will be sold at par. When the market rate is less than the contract rate of the bond, bonds will be sold at diseeunt-PREMIUM Critical thinking: Why do companies have to adjust bond pricing to market