#### chap7m5

Ohio State, ACCT 211m
Excerpt: ... Introduction to Financial Accounting Chapter 7, Module 5 Slide 1 CHAPTER 1 MODULE Chapter 7 Module1 5 Chapter 7 Module 5 AMIS 211 Introduction to Financial Accounting Professor Marc Smith Hi everyone. Welcome back. Just as a refresher before we jump into the key point of this Module. Because I know that this is tough-this is not an easy topic. This tends to be one of the more challenging topics that we cover. You really want to keep in mind that your Allowance for Doubtful Accounts is keeping track of two (2) specific items: 1) On the increase-or credit side-it is keeping track of your bad debt expense estimates that you have made. 2) On the decrease-or debit side-it is keeping track of the actual write-offs that you have had. So, at any point in time, you can look at that account. If the balance is on the credit side, we have written off less than we had thought. If the balance is on the debit side, we have written off more than we had estimated that we would write-off. AMIS 211 Professor ...

#### Lecture Notes March 27, 2009

Texas A&M, ACCT 315
Excerpt: ... : Accounts receivable 980 Sales 980 Entry on June 11 assuming payment is received: Cash 980 Accounts receivable 980 Entry on July 31 assuming payment is received: Cash 1,000 Accounts receivable 980 Sales discounts not taken 20 The account, Sales discounts not taken, is classified as "Other Revenue." e. There are two methods that could be used to account for uncollectible accounts (bad debts). They are: (1) the Allowance Method and (2) the Direct Write-Off Method. The Direct Write-Off Method is appropriate only if the amount of uncollectibles is not material. An examination of annual reports would most likely show that most all large and medium-sized companies use the Allowance Method. The Direct Write-Off Method will be presented later in these notes. Determining the bad debt expense under the Allowance Method Illustrative Problem Suppose the balance in the accounts receivable account at the end of the period is \$1,700. The Allowance for Bad Debts account has a credit balance of \$200 before the end of ...

#### Chapter_8

Penn State, ACCTG 211
Excerpt: ... Receivables Chapter 8 1 Receivables Assets that represent money claims against other entities (such as people, other businesses, or organizations) Usually arise as a result of making a sale or providing services on credit 2 Common Types of Receivables Accounts Receivable - normally expected to be collected within a short period of time (within 60 days of creation) Notes Receivable normally a longer expected collection time frame Other Receivables (such as interest receivable) 3 Uncollectible Receivables A business usually grants credit to increase sales, but only to those entities are judged to be credit worthy. However, despite best efforts, some receivables will never be paid off. This operating expense is known as Bad Debts Expense. 4 Accounting for Uncollectible Receivables Direct write-off method Allowance method 5 Direct Write-Off Method Records Bad Debt Expense only when a decision has been made to write-off an account receivable Bad Debts Expense A ...

#### 211c7m6

Ohio State, ACCT 211m
Excerpt: ... Introduction to Financial Accounting Chapter 7, Module 6 Slide 1 CHAPTER 1 MODULE Chapter 7 Module1 6 Chapter 7 Module 6 AMIS 211 Introduction to Financial Accounting Professor Marc Smith Hi everyone. Welcome back. Let's see if we can put our knowledge as to how to estimate bad debts to test. And, let's try a couple of examples. In this Module, let's work through Example #3 from the Web site problems. And, let's just read it together before we get started. Here is what it says: "XYZ Company had a \$250,000 balance in its Accounts Receivable on December 31st, 2002. Additionally, they had a \$2,100 Credit Balance in their Allowance for Doubtful Accounts at Year-End 2002 before the Adjustment (AJE) for bad debt expense . During 2002, XYZ Company reported Credit Sales of \$800,000." AMIS 211 Professor Marc Smith 1 Chapter 7, Module 6 Introduction to Financial Accounting Required: Part A. "Let's go ahead and let's calculate the bad debt expense and the Net Realizable Value (NRV) of our Accounts Re ...

#### 211c7m7

Ohio State, ACCT 211m
Excerpt: ... Introduction to Financial Accounting Chapter 7, Module 7 Slide 1 CHAPTER 1 MODULE Chapter 7 Module1 7 Chapter 7 Module 7 AMIS 211 Introduction to Financial Accounting Professor Marc Smith Hi everyone. Welcome back. Let's go ahead and let's get a little bit more practice with this bad debt estimation. And, let's look at Example #4 from the Web site problems. And, this one is going to be a little bit more involved. Notice the name of the problem: Comprehensive Bad Debt Problem. We are going to basically take all that we have learned so far about bad debts and Accounts Receivable and let's lump them into this one example. And, let's see if we can work our way through it. Let's look at the example together. Here is what it says: AMIS 211 Professor Marc Smith 1 Chapter 7, Module 7 Introduction to Financial Accounting "Grandma Veazy's House of Fun has compiled the following information to help in determining its year-end estimate of bad debt expense ." Here is the information they tell us: Our C ...

#### Lect6_08

Minnesota, ACCT 2050
Excerpt: ... Receivables and Revenue Recognition I. Allowances for Uncollectible Accounts - % of Sales - Aging Allowances for Uncollectible Accounts Not all Sales on Account are Expected to be Collected Therefore: 1. Sales Revenue overstates expected collections, and 2. Accounts Receivable overstates expected collections. Adjust Sales and Receivables for Expected Uncollectibles (Note an adjusting entry at end of the period.) % of Sales - use past experience to estimate % uncollectible. - make adjusting entry to reduce Sales Revenue and Accounts Receivable Bad Debt Expense Allowance for Uncollectibles(XA) \$xx \$xx Allowances for Uncollectible Accounts Contd. Adjust Sales and Receivables for Expected Uncollectibles Aging of Accounts Receivable - periodically examine outstanding (delinquent) accounts and revise estimates, making any necessary adjustment: Bad Debt Expense Allowance for Uncollectibles(XA) When it is Determined that a Specific Account is Uncollectible Allowance for Uncollectibles(XA) Account Receivable ...

#### hmwk_ch8

Saint Petersburg, ACG 2021
Excerpt: ... PRACTICE EXERCISES PE 81A Feb. 12 Cash . Bad Debt Expense . Accounts Receivable-Manning Wingard . 30 Accounts Receivable-Manning Wingard. Bad Debt Expense . 30 Cash . Accounts Receivable-Manning Wingard . 750 2,000 2,750 2,000 2,000 2,000 2,000 June PE 81B Aug. 7 Cash . Bad Debt Expense . Accounts Receivable-Roosevelt McLair. 23 Accounts Receivable-Roosevelt McLair . Bad Debt Expense . 23 Cash . Accounts Receivable-Roosevelt McLair. 175 400 575 400 400 400 400 Nov. PE 82A Feb. 12 Cash . ...

#### Chapter 6 homework solutions

University of Texas, ACC 311
Excerpt: ... nciple, the allowance method records bad debt expense in the same period in which the credit was granted and the sale was made. Using the allowance method, bad debt expense is recognized in the period in which the sale related to the uncollectible account was recorded. The write-off of bad debts using the allowance method decreases the asset accounts receivable and the contra asset allowance for doubtful accounts by the same amount. As a consequence, (a) net income is unaffected and (b) accounts receivable, net, is unaffected. 2. 7. 8. 9. . EXERCISES E61. Sales revenue (\$1,000 + \$900 + \$500) . Less: Sales discount (\$1,000 collected from S. Green x 2%). Net sales . E66. Req. 1 WOLVERINE WORLD WIDE INC. Income Statement For the Year Ended \$2,400 20 \$2,380 Amount Sales of merchandise Cost of products sold Gross profit Selling and administrative expense Income from opera ...

#### Accounting Terms Test 3 Receivables

Auburn, ACCT 2020
Excerpt: ... Cash, Receivables, and Investments Cash- Medium of exchange Cash Equivalent- Any investment that: 1) is readily convertible into a known amount of cash -and- 2) will mature within 3 months or less from the date it was aquired Ex. Treasury bills, CD's, money market accounts. Bank Reconciliation- The process of reconciling the cash balance shown on the bank Statement with the cash balance shown in a company's records Petty Cash Fund- an amount of coins and bill kept on hand to pay for minor expenditures Accounts Receivable- An amount owed a by a customer who has purchased the company's product or service. It is recorded at the time of sale. Net Realizable Value- The amount of cash that is expected to be collected from total or Or gross accounts receivable. Total Accts. Rec. Less: Receivables expected to be uncollected _ Net Realizable Value of Receivables Bad Debt Expense - An operating expense. This is where losses from uncollectible Accounts are recorded; Two Methods: Direc ...

#### Lecture Notes March 25, 2009

Texas A&M, ACCT 315
Excerpt: ... Illustration The Net Method: Entry on June 1: Accounts receivable 980 Sales 980 Entry on June 11 assuming payment is received: Cash 980 Accounts receivable 980 Entry on July 31 assuming payment is received: Cash 1,000 Accounts receivable 980 Sales discounts not taken 20 The account, Sales discounts not taken, is classified as "Other Revenue." e. There are two methods that could be used to account for uncollectible accounts (bad debts). They are: (1) the Allowance Method and (2) the Direct Write-Off Method. The Direct Write-Off Method is appropriate only if the amount of uncollectibles is not material. An examination of annual reports would most likely show that most all large and medium-sized companies use the Allowance Method. The Direct Write-Off Method will be presented later in these notes. Determining the bad debt expense under the Allowance Method Illustrative Problem Suppose the balance in the accounts receivable account at the end of the period is \$1,700. The Allowance for Bad Debts account h ...

#### ORIE 350 lecture 6

Cornell, ORIE 350
Excerpt: ... Accounts Receivable It is a current asset on the balance sheet. Do not want to overstate its val on the bal.sheet We do not want to put an inaccurate value on the balance sheet Must include allowance for uncollectible accounts Direct write off method a. Not allowed by Generally accepted accounting principles(GAAP) b. Simply wait until an account becomes uncollectible c. Problem violates matching principle Year 2008 Record bad debt expense i. Year 2007 Record revenue from sales on account Solution: Estimate the bad debt expense in the period in which the sale is made. Percentage of net credit sales Adjustment is made at the time of sale or at the end of the accounting period We subtract the cash sales and net sales to get the net credit sales Based on past history, we estimate a percentage that we prove to be uncollectible E.g philx inc estimate 2% of net credit sales will prove uncollectible. For the 4 th quarter of 2007 Net sales 900,000 Cash sales -200,000 Net credit sales 700,000 x 2% =14,000 Adju ...

Marist, ACCT 200

#### Midterm Page 2

NYU, ACC FA
Excerpt: ... Closing Accounts Asset Accounts Debit on Balance Sheet Liabilities & Common Stock Payables Unearned Rev Credit on Balance Sheet Depreciation Credit on Asset Side of BS Revenue Accounts Credit on I/S Expense Accounts Debit on I/S Revenue Accounts Closing Entry: Debit Revenue xxx Credit Income Summary xxx Expense Accounts Closing Entry Debit Income Summary xxx Credit Expense xxx I/S Credit = I/S Debit = Net Income Net Income Credit on B/S (balances it) Credit on Retained Earnings Dividends Declared Debit on Retained E. Contra Accounts Accumulated Depreciation Credit Bal Link w/ PPE Allowance for Doubtful Acc Credit Bal Link w/ Acc. R. Sales Returns & Allowance Debit Bal Link w/ Revenue Cash Discount on Sales Debit Bal Link w/ Revenue Record Returns Dr. Sales and Allowances xxx Cr. Accounts Receivable xxx Cash Discounts 2/10, n/30 = 2% D/C within 10 days, Full Amt Due in 30 days. Dr. Cash Discounts on Sales xxx Cr. Accounts Receivable xxx Direct Write-Off Method Dr. Bad Debt Expense xxx Cr. Acc. Rece ...

#### Lecture_eight_Feb_20

Cornell, ORIE 350
Excerpt: ... ORIE 350 Lecture Eight February 20, 2007 Accounts Receivable Accounts receivable account is treated as a current asset. We want to be sure to record this asset at its correct value. The value we show on the balance sheet should be the same as the amount of cash we expect to convert it into. It is important to have an accurate figure, as accounts receivable can be quite large for some firms. For example, General Motors has over \$20 billion in receivables. Accounts Receivable Using accrual accounting, we recognize sales on account as revenue. Some of these customers will fail to pay. Thus, we have to record some amount each period to recognize this. This amount will be recorded as an expense, a bad debt expense This is typically small (like 2% of total sales). Direct Write Off Method This method is common sense. Using this method, when I learn about an existing Accounts Receivable that I cannot collect upon, I will charge it off as an expense. ...

#### Lecture 8 0220

Cornell, ORIE 350
Excerpt: ... ORIE 350 Lecture Eight February 20, 2007 Accounts Receivable Accounts receivable account is treated as a current asset. We want to be sure to record this asset at its correct value. The value we show on the balance sheet should be the same as the amount of cash we expect to convert it into. It is important to have an accurate figure, as accounts receivable can be quite large for some firms. For example, General Motors has over \$20 billion in receivables. Accounts Receivable Using accrual accounting, we recognize sales on account as revenue. Some of these customers will fail to pay. Thus, we have to record some amount each period to recognize this. This amount will be recorded as an expense, a " bad debt expense " This is typically small (like 2% of total sales). Direct Write Off Method This method is common sense. Using this method, when I learn about an existing Accounts Receivable that I cannot collect upon, I will charge it off as an expense. D ...

#### Study Sheet for Accounting Test 2

Iona, BUS 201
Excerpt: ... Study Sheet for Accounting Test 2: Ch 5, 6, 7, 8 Chapter 5 Sales Revenue- The primary source of revenue for merchandising companies is the sale of merchandise. -A merchandising company has 2 categories of expenses: the cost of goods sold and operatin ...

#### Bus230AMinitest7AnsKey

Sonoma, BUS 230A
Excerpt: ... Bus 230A Minitest 7 Answer Key 1 a 2 c 3 d Beg. Allowance for Uncollectible Accounts(DR) Adjustment Necessary for Correct End. Bal.(CR) End Allowance for Uncollectible Accounts(CR) Allowance for Uncollectible Accounts 1,300 16050 End. Bal. 14,750 Bad ...

#### Bonus 3

UConn, ACCT 131
Excerpt: ... TO: Richard Kochanek FROM: Brittany-Ann Mac Allister 1586296 1. Bad Debts Expense 8100 Allowance for Doubtful Accounts 2. Bad Debts Expense 8700 Allowance for Doubtful Accounts 3. 291,000 4. Allowance for Doubtful Accounts 800 Accounts Receivable 5. ...

#### accounting 3b book notes

UCSB, ACCT 101
Excerpt: ... Chapter 6: Reporting and Analyzing Inventory Classifying inventory merchandising: inventory consists of many different items [ie grocery store] manufacturing: o finished goods inventory [complete and ready for sale] o work I process [been placed in ...

#### 2.16 Accounting 211

Penn State, ACCTG 211
Excerpt: ... mated Output = Depletion Expense per Unit of Output Chapter 8 Example: The NL Corporation reported \$100,000 of net credit sales during 1997. Past history suggests that 1.5 % of net credit sales will not be collected. 1997 Bad Debt Expense \$100,000 x 1.5% = \$1,500 12/31/97 Adjusting Entry Bad Debt Expense Allowance for Uncollectable Accounts (contra-asset account) 1,500 1,500 Balance Sheet Presentation Accounts Receivable Less: Allowances for Uncollectable Accounts Net Accounts Receivable (what we expect to collect) ...

#### Quick check and quiz answers -- chapter five

Baylor, ACC 2302
Excerpt: ... Chapter Five Quick Check pages 286 288 and Quiz pages 296 298 Quick Check: 1. B Trading securities are classified at fair market value. In this case \$55,000. This is an exception to the historical cost principle. 2. C The gain or loss on trading securities is recognized (recorded) even though it is not realized. 3. Typo in the book. If a company uses the percentage of sales method, the existing balance in the allowance for uncollectible accounts is ignored. The bad debt expense would be credit sales times 2% = \$760. 4. D After the above entry: Bad Debt Expense 760 Allowance for uncollectible accounts 760 The allowance will have a balance of 750 + 760 = 1510. Remember the allowance account is a contra-asset that reduces the accounts receivable account down to the net realizable value. 5. A The focus of the aging (or percentage of receivables) method is estimation of the net realizable accounts receivable. Per the facts, the amount needed at the end of the year in the allowance for uncollectible accou ...

#### Fall 2007 Lecture 9 accounts and notes receivables

Georgetown, ACCT 101
Excerpt: ... ACCT-101 Class 9 Accounts Receivables and Notes Receivables Outline A brief overview of accounts receivable Class activity 1 Focus company: HealthSouth Class activity 2 Notes Receivables A short summary of first quiz Credit sale: matching principle Matching principle requires that all cost of generating revenues be recorded in the same period as the revenues. Since customer default are a cost of generating revenues, the expected default must be estimated and recorded as bad debt expense in the period the sales are recorded. Two methods for bad debt expense s Aging of receivables method Percentage-of-sales method Aging-of-receivables approach start with calculating the ending balance of "allowance for uncollectible accounts" on balance sheet and then move to determining "bad-debt expenses" on the income statement Percentage-of-sale approach start with recording "bad-debt expense" on the income statement and then move to determine the ending balance of "allowance for doubtful ...

#### ch 8

Arizona, ACCT 200
Excerpt: ... Chapter 8 Suggested Practice Problems BRIEF EXERCISE 8-3 (a) Allowance for Doubtful Accounts . Accounts Receivable . (b) Accounts receivable Allowance for doubtful accounts Cash realizable value (1) Before Write-Off \$700,000 28,000 \$672,000 3,000 3,0 ...

#### Chp-06

Cal Poly Pomona, ACC 207
Excerpt: ... 00 E68. (a) Bad debt expense (+E, SE) (\$650,000 x 0.02) . 13,000 Allowance for doubtful accounts (+XA, A). To record estimated bad debt expense . Allowance for doubtful accounts (XA, +A) . 1,000 Accounts receivable (A) . To write off a specific bad debt. 13,000 (b) 1,000 PROBLEMS P61. Case A Because McDonald's collects cash when the coupon books are sold, cash collection is not an issue in this case. In order to determine if the revenue has been earned, the student must be careful in analyzing what McDonald's actually sold. Students who focus on the sale of the coupon book often conclude that the earning process is complete with the delivery of the book to the customer. In reality, McDonald's has a significant additional service to perform; it has to serve a meal. The correct point for revenue recognition in this case is when the customer uses the coupon or when the coupon expires and McDonald's has no further obligation. Case ...

#### Chapter_9

Purdue, HTM 141
Excerpt: ... nded time period. When a company grants direct credit to customers, it expects that some customers will not pay what they promised. The accounts of these customers are uncollectible accounts, commonly called bad debts. The total amount of uncollectible accounts is an expense of selling on credit. Uncollectible accounts expense (bad debt) Direct write-off method - accounts are written off when it is determined they are uncollectible - Bad debt expense 150 Accounts receivable 150 - Bad debt expense is closed at the end of the period - One difficulty with this method is matching revenues and expenses. Allowance methods better match revenues and expenses Percentage of Sales: Based on sales, an estimate is made of the amount that will be uncollectible and written off. Bad Debt Expense Allowance for doubtful accounts xxx xxx Allowance for doubtful accounts is a contra asset account. Regardless of the method used, the unpaid account is taken of the books Allowance for doubtful accounts Accounts Receivable x ...