Direct Method versus the Allowance Method

You are the controller of ABC Company. You have been asked by the Board of Directors to assist them with upcoming changes they are looking to make for the company.

They need additional information from you regarding the company overall. The Board of Directors has asked you to explain the method used to handle noncollectable Accounts Receivables.

They know that you use the Allowance Method but are not familiar with the difference between the Direct Method versus the Allowance Method. Explain each type of method and why ABC Company has selected the Allowance Method. Keep in mind the intended audience of the memo.

Direct Method versus the Allowance Method

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