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The allowance method will provide an estimate for bad debt expense, as well as estimate the balance for the allowance contra account to accounts receivable.

The allowance method will provide an estimate for bad debt expense, as well as estimate the balance for the allowance contra account to accounts receivable. How will the items affect the income and balance sheet? For example, how will changing the aging category data affect the accuracy and reliability of information reported? Will the balance sheet accounts be accurate if they are over/understated? How will the over/understatement of expenses, for example, affect the income statement?

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