acct - chap 8 notes

***when we collect PREVIOUSLY written off AR (we reverse what was done when ar was first written off) what are the journal entries for collecting previously wriiten off AR - hint there are two different ways

1. debit ar credit ada, debit cash credit ar 2. debit cash, credit ada

what are the two ways to estimate bad debts using the allowance method

1. income statement method 2. balance sheet method

Which of the following is recorded with a debit to Interest Receivable and a credit to Interest Revenue?

The adjusting entry to record interest earned but not yet received

Which of the following is recorded with a debit to Notes Receivable and a credit to Cash?

The establishment of a note

Which of the following is recorded with a debit to Cash and a credit to Interest Receivable?

The receipt of an interest payment for interest previously recorded

Which of the following is recorded with a debit to Cash and a credit to Notes Receivable?

The receipt of the principal payment

classified as a " current asset" on the BS. must be reported at the amount the business expects to collect on the receivable - or the net realizable value (NRV)

accounts receivable

what is the balance sheet presentation - when faced with bad debt what will we not collect

ada

what is the amount of ar that you do not expect to receive - a contra asset account

allowance for doubtful accounts (ada)

estimates bde at the end of a period and is recorded through aje. follows the matching principle and is gaap how we deal with bad debt if we have credit sales

allowance method, we do use

what is the balance sheet presentation - when faced with bad debt what is billed?

ar

what is the balance sheet presentation - when faced with bad debt

ar #, less allowance for doubtful accounts (ADA) # = net realizable value (NRV)

again - what are the effects of the balance sheet when using IS and BS methods

ar, less ada = ar net

***when we collect PREVIOUSLY written off AR (we reverse what was done when ar was first written off) 1. debit ar credit ada, debit cash credit ar 2. debit cash, credit ada what balance sheets does this effect and does this effect the financial statement

asset up, asset down, no effect

when we write off ar when the account is known and debit ada and credit ar, what balance sheet account our moving up and down? does this effect our financial statement?

asset up, asset down, no effect

credit sales generates

bad debt

what is the cost of doing business on CREDIT with customers who do not pay

bad debt

classified as a " selling expense" in the I/S and is closed at the end of the year

bad debt expense

what $ estimate when using income statement method

bad debt expense

which way when estimating bad debts do we estimate = % of ending AR? ___________ this method calculates the _______________ on the _____

balance sheet method (or AR aging), ending balance of allow for doubtful accts, bs

what account are affects from bad debt expense

bde and accounts receivable

what account is allowance for doubtful accounts (ada)

contra asset

The adjusting entry to record the allowance for doubtful accounts includes a ______. (Check all that apply.)

credit to Allowance for Doubtful Accounts, debit to Bad Debt Expense

ar will be traded with the amounts due from

customers from sale of goods/services

when using IS or BS method - what do we always debit and credit first for the AJE? how does this effect out NI?

debit BDE credit ADA, decreases NI because it decreases she and decreases asset

The adjusting entry to record interest owed

debit Interest Receivable and credit Interest Revenue

what aje - which debit and credit - do we record (everytime) when we create the ade to record bde at the end of a period (unknown which exact accts) does this effect the financial statement?

debit bde credit ada, yes

records bad debt expense when the bad debt customer has been identified. this violates the matching principle and is not GAAP debit bde credit ar

direct write off method, we do not use

we record bad debt expense at the end of a period when we ___ know which accts will go bad but know some will

dont

what $ estimate when using BS method

ending ADA

when we record bad debit and debit bde and credit ada, what balance sheet accounts is this effecting? what is going up and down

expense is up so she is down, ad asset is down

if you record sales in one period when they occur and bde in a different period when they are discovered you will violate the

expense recognition principle

which way when estimating bad debts do we estimate = % of credit sales for year? ________ this method calculates the ___ on the _____

income statement method, bde, IS

when we write off ar when the account is known - dbeit ada credit ar -, does this effect our financial statement?

no effect

what is the balance sheet presentation - when faced with bad debt what we will collect

nrv ar, net

record bad debt at the end of the ____ as an ____

period, aje to IS and BS

when should we recognize the uncollectable receivable - which method do we use and which do we not

use allowance method, dont use direct write off method

after we record bde and ada at the end of the period, then we will WRITE OFF AR WHEN what do we debit and credit

we know which acct is bad, debit ada credit ar