1. Explain the difference between the income statement approach and the balance sheet approach to estimating bad debt expense.
 
 
 
 
 
 
 
 
 
 
 

2. Explain the differences between accounting for receivables factored (sold) with recourse and those factored (sold) without recourse.
 
 
 
 
 
 
 
 
 
 
 

3..Define a compensating balance. How should a compensating balance be reported?
 
 
 
 
 
 
 
 
 
 

4.What is the theoretical justification of the allowance method as contrasted with the direct write off method of accounting for bad debts?