Accounts Receivable
When a company determines a specific customer will not pay, a ____-____ occurs. This can happen at any point during the ____ and respresents the actual ___ _____ of the company.
write-off, year, bad debts
_____-_____ do not affect the amount of bad-debt expense.
write-offs
The three things that make up the allowance for doubtful accounts t-account are: 1) _____-_____ 2) ______ 3) _____-______ _____
write-offs, recoveries, bad debt expense
Allowance for doubtful accounts represents the amount of _________ ______ the company estimates it will not collect. Hence why it appears as a reduction to _______ _______ on the _____ _____.
accounts receivable, accounts receivable, balance sheet
NRV= ______ _____-______
accounts receivable, allowance
______ ___ ______=_net sales revenue/average accounts receivable
accounts receivable turnover
Two ratios for accounts receivable: 1) _______ ___ ____ 2) _______ _______ ___
accounts receivable turnover, average collection period
The ______ _____ _____ ratio is an indication of how many times a year a company is 'turning over' or collecting its receivables. The ratio is a measure of how many times _____ receivables are collected and replaced by ____ receivables.
accounts receivable turnover, old, new
If the sale of goods or performance of services occurs prior to the receipt of cash, it is an _____ _____ and an ____ _____ will be recorded.
accrued revenue, account receivable
Bad debt expense will be recorded in the sale year the ___ is made (ie, _____ is earned), in order to follow the _____ ________.
sale, revenue, matching concept
Two things will affect sales revenue: 1) ______ _____ and _____ 2) ________ ________
sales returns and allowances, sales discounts
To determine the allowance for doubtful accounts, always use a ___-____.
t-account
An existing balance in the allowance for doubtful accounts using the net credit sales method (will/will not) effect the current years bad debt estimate. ??????/
will not
Sales discounts may have #'s reading ___/____, ____/_____, read as 'three, ten, net, thirty," that means there is a ___% ____ allowed on all payments made within ____ days. After this, ___ discount is available and the remaining balance is due in ___ days.
3/10, n/30, 3, discount, 10, no, 30
average collection period=_____/_____ _____ ____
365, accounts receivable turnover
The # you get from the ______ _____ calculation DOES NOT give you _____ ______ _______. Rather, this # represents the required ending ____ balance in the ________ _____ _____ _____. You will need to set up a ___-____ to estimate bad debt expense.
aging schedule, bad debt expense, credit, allowance for doubtful accounts, t-account
To record a write-off you will debit your ______________ and credit your __________.
allowance for doubtful accounts, accounts receivable
Sales ____ occur when customers are dissatisfied with the merchandise and the seller allows a ______ from the selling price.
allowances, reduction
_____ ____ ____=365/accounts receivable turnover
average collection period
The aging method holds that the _____ a debt is outstanding, the ____ likely it is to be paid.
longer, less
Since not all customers pay their bills, companies must record _____ ___ ____ each year. This expense will be recorded in the year the ____ _____ is made
bad debt expense, credit sale
Using the net credit sales method to estimate ___ ____ ___: bad debt expense will be based on a ___ of current credit sales estimated to be _____ where the percent is based on past _____/____ pattern.
bad debt expense, percent, uncollectible, experience/historical
Write-offs do not affect the amount of ____-____ ______.
bad-debt expense
Allowance for doubtful accounts is a/an _____ _____ account since it causes a decrease in ______. Normal balance will be a _____. Found on the balance sheet as a ____ to _____ ____.
contra asset, assets, credit, decrease, accounts receivable
Sales discounts are ______ ______ accounts. Normal balance of _____.
contra revenue, debit
Sales returns/allowances are _____ ____ accounts. Normal balance of ____.
contra revenue, debit
Sales returns/allowances and sales discounts are both _____ _____ accounts, meaning they result in a ____ to ____, specifically ____ revenue.
contra revenue, decrease, revenue, sales
The average collection period measures the # of days on average between making a sale on ____ and collecting ____ from a customer.
credit, cash
When a sales return is made to a company, it will result in a ____ to sales ____ and _____, meaning a decrease to ____.
debit, returns, allowances, revenue
Sales _____ are an offer of a ____ _____ to a ____ customer for the prompt payment of a balance due.
discounts, cash discount, credit
Reasons for sales _____: 1) increase ____ (discounts entice ppl to buy more) 2) speed up collection of ____ (we need to pay our own bills) 3) minimize the liklihood of ____ ____
discounts, sales, cash, bad debts
Bad debt expense is an _______. It is recorded at the end of the year as an _____ _____ which causes a debit to the __ ___ ___ and a credit to your ______ ____ _____ ________.
estimate, adjusting entry, bad debt expense, allowance for doubtful accounts
Bad debt expense is a/an ____ account and thus is found on the ____ _____. It has the effect of _______ net income.
expense, income statement, reducing
The _____ the accounts receivable turnover ratio, the better. This means we are collecting our _____ faster from our customers.
higher, cash
Average accounts receivable=(accts receiv. avail. at _____ ___+accts receiv. avail. at ____ ___)/____
jan 1, dec 31, 2
Net credit sales method: _____ ____ ____x _______ ______ _____ (based off past experience)
net credit sales, % expected uncollectible
Unlike the ____ ___ ____ method, an existing balance in the allowance for doubtful accounts will affect the current ______ _____ _____.
net credit sales, bad debt expense
The ending balance in the allowance for doubtful accounts is what is used to calculate ____ ______ _______.
net realizable value
______ _____ _____ will affect the balance sheet.
net realizable value
The write-off of an account receiveable has no effect on _____ _____ _____. This is because a write-off entry will reduce _____ ____ and ____ by equal amounts.
net realizable value, accounts receivable, allowance
Accounts receivable turnover= ________ ______ ______/______ ______ _______
net sales revenue/average accounts receivable
The accounts receivable turnover ratio measures the ______ of times on average that the company collects its ____ ______.
number, accounts receivable
Two methods to estimate bad debt expense: 1) ____ ___ ____ (____ ____ _____ method) 2) _____ ______ ______ (________ method)
percentage of sales, net credit sales, percentage of receivables, aging
If a customer pays their bill after a company has written-off their account, it is called a _____.
recovery