ch8

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

dr. cash (+A) cr. accounts receivable (-A)

$100 cash collected

(1000)(0.06)(3/12)

3 month note for $10,000 at 6% annual interest rate

allowance method

A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period.

subtracted

allowance account is __ from gross accounts receivable to yield a net amount

dr. allowance for doubtful accounts (-xa, +a) cr. accounts receivable (-a)

assume $200 of the outstanding receivables is determined to be uncollectable (to write off a receivable)

dr. allowance for doubtful accounts (-xa, +a) cr. accounts receivable (-a) dr. accounts receivable (+a) cr. allowance for doubtful accounts (+xa, -a) dr. cash (+a) cr. accounts receivable (-a)

assume an account was written off then later collected (this will require 3 entries) 1) write off account 2) reverse the original write off 3) collect the cash

dr. bad debt expense (+e, -se) cr. allowance for doubtful accounts (+xa, -a)

assume co. estimates. bad debt expense for its first year of operations

(net sales)/(average accounts receivable)

calculate accounts receivable turnover (to analyze receivables)

365/(accounts receivable turnover)

calculate average collection period (to analyze accounts receivable)

(desired balance per aging method)-(beginning balance)=

calculate the required entry to obtain desired balance to record bad debt expense for the period (using aging method)

dr. bad debt expense (+e, -se) cr. allowance for doubtful accounts (+xa, -a)

company is recording percentage of sales method

allowance for doubtful accounts

contra-asset account with a normal credit balance

bad debt

credit losses are debited to __ __ expense

accounts receivable

current asset resulting from a sale or service executed on a credit basis

direct write off method

doubtful accounts are charged to bad debt expense in the period they are determined to be uncollectible (no need for allowance of doubtful accounts because no estimate is made) (violates matching principal so GAAP doesn't allow this method unless amounts of bad debts are immaterial)

percentage of sales method

estimates bad debt expense as a percentage of credit sales for a given period (% used is usually based on historical past credit losses)

accounts receivable aging method

estimates the allowance for doubtful accounts as a percentage of the outstanding accounts receivable. Bad debt expense is determined as the amount necessary to achieve the proper balance in the allowance account (assumes older account receivables are less likely to be collected)

accounts receivables= original-write off+recovered-received cash allowance= original-write off+recovered net rec= accounts receivables-allowance

find net receivables balance

immediately

for cards issued by a financial institution, cash is received __ upon deposit of the credit card sales slip at the financial institution

dr. accounts receivable (+A) cr. sales revenue (+Re, +Se)

if costumer buys $100 of good on credit

(principal)(interest rate)(interest time)=

interest calculation

(credit sales)(percentage)=

percentage of sales calculation

dr. cash (+a): $970 dr. credit card fee expense (+e, -se): $30 cr. sales revenue (+r, +se): $1000

record a $1000 credit card sale with a 3% credit card fee

dr. interest receivable (+a) cr. interest income (+r, +se)

record computed interest (to accrue interest income)

dr. cash (+a) cr. interest receivable (-a)

record when interest is actually received (record receipt of interest payment)

promissory notes receivable

used in sale transactions when the credit period is longer than the 30-60 day period common for accounts receivable

factoring receivables

when a company sells receivables to collect cash on accounts and notes receivables quicker (company will receive cash-discount)

bad debt/credit loss

when a costumer doesn't pay back an accounts receivable (considered an operating expense)

expense, total assets

writing off a receivable when it's determined to be not collected will not affect the __ or __ __, it is just a housekeeping entry


Ensembles d'études connexes

this is phil hales end chap 3 beg chap 4

View Set

"Napa Know how" Mental Health Exam 1

View Set

EMT - Ch. 4: Communications and Documentation

View Set

Culture and Health on nutrition part 1 & 2

View Set

PSY360: Educational Psychology-Chapter 6

View Set