What is recorded in the allowance for doubtful accounts?

The allowance for doubtful accounts is a contra asset account that represents management's estimate of the portion of accounts receivable that may ultimately be uncollectable. This estimate is based on historical data, trends, and specific knowledge about certain customers' financial situations. It allows businesses to present a more accurate picture of their financial position by showing the expected losses rather than just recording the full amount of receivables owed. This approach adheres to the matching principle in accounting, ensuring that expenses related to uncollectible accounts are recorded in the same period when the related revenue is recognized.

The other options do not accurately reflect the function of the allowance for doubtful accounts. It does not record the total value of all accounts receivable, as that would not account for the potential risk of defaults. Similarly, while total sales made to customers and actual cash collected from customers are key figures in financial reporting, they do not pertain directly to the estimation and management of uncollectible accounts.