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