Documents about Bad Debts

  • 26 Pages

    sm06

    Kennesaw, ACCT 4250

    Excerpt: ... CHAPTER 6 DEDUCTIONS AND LOSSES: CERTAIN BUSINESS EXPENSES AND LOSSES SOLUTIONS TO PROBLEM MATERIALS Question/ Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Topic Bad debts : cash basis taxpayer Bad debts : partial worthlessness Bad debts : worthlessness Bad debts : recovery Bad debts : business versus nonbusiness Bad debts : loan versus gift Worthless securities 1244 stock Issue recognition Business loss Theft loss Casualty: reimbursement Casualty loss: disaster area Business losses Casualty loss: insurance claim Casualty loss: cost of repairs method Casualty loss: $100 floor Casualty loss: deduction for versus from Casualty loss: 10% of AGI floor Issue recognition Issue recognition Research expenditures Research expenditures Issue recognition Net operating loss: carryback and carryforward Bad debts : nonbusiness Bad debts : tax benefit rule 6-1 Status: Present Edition New Unchanged New Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Unchan ...

  • 12 Pages

    Ind. IO Chap. 8 - 2008

    University of Phoenix, ACCT 45089

    Excerpt: ... Chapter I:8 Losses and Bad Debts Learning Objectives After studying this chapter, the student should be able to 1. 2. 3. 4. 5. 6. 7. 8. Identify transactions that may result in losses. Determine the proper classification for losses. Calculate the suspended loss from passive activities. Identify what constitutes a passive activity loss. Determine when a taxpayer has materially participated in a passive activity. Identify and calculate the deduction for a casualty or theft loss. Compute the deduction for a bad debt. Compute a net operating loss deduction. Areas of Greater Significance The treatment of passive losses is relatively complex. Passive loss rules have greatly influenced the use of limited partnerships as an investment vehicle. The treatment of business bad debts for tax purposes can be dramatically different from financial reporting, with corresponding book to tax differences. Areas of Lesser Significance In the interest of time, the instructor may determine that the following area is best covered ...

  • 12 Pages

    ch8 Losses_and_Bad_Debt

    University of Phoenix, ACC 483

    Excerpt: ... Chapter I8 Losses and Bad Debts Learning Objectives After studying this chapter, the student should be able to 1. 2. 3. 4. 5. 6. 7. 8. Identify transactions that may result in losses. Determine the proper classification for losses. Calculate the suspended loss from passive activities. Identify what constitutes a passive activity loss. Determine when a taxpayer has materially participated in a passive activity. Identify and calculate the deduction for a casualty or theft loss. Compute the deduction for a bad debt. Compute a net operating loss deduction. Areas of Greater Significance The treatment of passive losses is relatively complex. Passive loss rules have greatly influenced the use of limited partnerships as an investment vehicle. The treatment of business bad debts for tax purposes can be dramatically different from financial reporting, with corresponding book to tax differences. Areas of Lesser Significance In the interest of time, the instructor may determine that the following area is best covered b ...

  • 6 Pages

    Ch9

    USC, ACCT 410X

    Excerpt: ... guarantee is not a large amount, then the work is done, or virtually done, when the job is completed. Cash collected or collectible: If past history shows that customers generally are reliable in paying, then we do not have to wait until the cash is collected 30 days after the job is completed before recognizing revenue. In summary, if past history shows that the free guarantee work is not significant and customers are fairly reliable in paying, then revenue should be recognized at the time job is completed, Increase/Decrease/No Effect Increase No effect Increase 24,000 24,000 24,000 24,000 Amount $24,000 $24,000 which is option (c). Because the work is guaranteed for five years, James Dee should also set up an Estimated Warranty account to recognize the future liability for re-cleaning jobs. E 9-7 Sales, Cash Collection, and Bad Debts Transaction 1. Sales during year 2. Cash collected on account 3. Establishment of allowance for bad debts E 9-8 Financial Statement Impact of Bad Debts 1. The effect of ...

  • 2 Pages

    Accounting Terms Test 3 Receivables

    Auburn, ACCT 2020

    Excerpt: ... t Write off and Allowance Allowance Method- company estimates and records bad debt expense at the end of the period Allowance for Bad Debts - an account that represents the total amount of receivables that a company believes will ultimately be uncollectible. * CONTRA ASSET ACCOUNT* Percentage of Sales Approach- bad debt expense is a function of sales for the period Percentage of Receivables Approach- bad debt expense is a function of the ending Receivables balance Aging Schedule- a listing and summation of accounts receivable by their ages Receivable Turnover Ratio- Compares a company's credit sales during a period to its Average receivables balance during that period. Credit Sales Average receivables Average receivables= = Rec. Turnover Ratio (beginning balance + ending balance) 2 Days In Receivables Ratio- converts the receivable turnover ratio into a measure of days By dividing the ratio into 365 days 365 Rec. Turn. Ratio= Days in Rec. Ratio Allowance Ratio- compares that allowance to acco ...

  • 12 Pages

    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 ...

  • 13 Pages

    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 ...

  • 10 Pages

    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 ju ...

  • 10 Pages

    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 ...

  • 7 Pages

    ACCT 2000 Chapters 5

    LSU, ACCT 2000

    Excerpt: ... e FIFO results FIFO- $800 AC$708 LIFO- $580 Consistencyuse the same accounting methods from year to year - Cant switch unless business has a legitimate reason to switch Accounts Receivable- the asset account that means we have sold goods or services on credit to customers and they owe us money for the goods or services "Bad Debt"- uncollectible Accounts Receivable 1. Unhappy customers 2. Bankruptcy (customers financially unable to pay) 3. Customers relocate 4. Jerks! People think they don't have to pay 5. Death How do you account for Bad Debt? 1. Direct Write-off Method Upon learning of or deeming a specific account is uncollectible Bad Debt Expense XXX Accounts Receivable XXX 2. "Allowance Method" If Bad Debts are material GAAP requires the Allowance Method Ex. Assume 11/06 Accounts Receivable 1,000 Service Revenue 1,000 Give up 9/07 Bad Debt 1,000 Accounts Receivable 1,000 Violates "Matching Principle" Matching Principalrecord expense in same accounting period as the revenue to which it relates (Can't b ...

  • 11 Pages

    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 ...

  • 10 Pages

    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 ...

  • 6 Pages

    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 collection ...

  • 5 Pages

    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 ...

  • 5 Pages

    Chp-06

    Cal Poly Pomona, ACC 207

    Excerpt: ... 4,200 44,200 20,000 4,000 $16,000 $1.60 f. e. g. d. b. c. a. Case B $160,000 16,250 143,750 (68%) 97,750 46,000 18,500 27,500 5,500 $22,000 $2.20 a. c. b. d. e. f. g. a. b. c. d. e. f. g. a. b. c. d. e. f. g. P64. 1. Bad debt expense (+E, SE) . 162 Allowance for doubtful accounts (+XA, A) . End-of-period bad debt expense estimate. Allowance for doubtful accounts (XA, +A) . 145 Accounts receivable (A) . Write-off of bad debts . 2. Year 2 . $69 Year 1 . $61 Allowance for DA Year 2 69 Write-offs 41 30 58 Beg. bal. Bad debt exp. End. bal. Write-offs 15 + $30 + $23 $41 = $58 $15 = $69 162 145 Allowance for DA Year 1 61 23 69 Beg. bal Bad debt exp. Ending Bal. The solution involves solving for the missing value in the T-account. ...

  • 46 Pages

    ch10

    Brookdale, IENG 3315

    Excerpt: ... Receivables C H A P T E R 10 Learning Objectives 1. 2. 3. 4. Describe accounts receivable and how they occur and are recorded. Apply the allowance method to account for accounts receivable. Estimate uncollectibles using approaches based on sales and accounts receivable. Apply the direct write-off method to account for uncollectible accounts receivable. Learning Objectives 1. 2. 3. 4. Describe a short-term note receivable and compute its maturity date and interest. Record short-term notes receivable. Explain how receivables can be converted to cash before maturity. (Appendix 10A) Compute accounts receivable turnover and days' sales uncollected to analyze liquidity. (Appendix 10B) Accounts Receivable Arise from credit sales to customers. Often referred to as Trade Receivables. Other receivables include interest receivable, rent receivable, tax refund receivable. Accounts Receivable Companies selling on account need to: Maintain a separate account for each customer. Account for bad debts . ...