Chapter_7_Receivables[1] Handout

Chapter_7_Receivables[1] Handout - Chapter 7 Receivables...

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Chapter 7 Receivables Recording Credit Sales (gross versus net method) Data: Sell merchandise on credit for $1,000, terms: 2/10, N/30. Method 1: Gross Accounts Receivable S a l e s If the discount is taken: Cash Sales Discounts Accounts Receivable OR If the discount is not taken Cash Accounts Receivable Financial Statements Income Statement Income Statement No Discount Discount Taken S
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Method 2: Net Accounts Receivable S a l e s If the discount is taken: Cash Accounts Receivable OR If the discount is not taken: Cash Other Income Accounts Receivable Financial Statements Income Statement Income Statement No Discount Discount Taken
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Uncollectible Accounts (Bad Debt) Data: Total sales: $10,000,000, Cash: $1,000,000 Store Credit: ?? Credit Card: $6,000,000 Fees: 1% Returns, Discounts, Allowances (all store credit customers): $500,000 Accounts Receivable 1/1/x1: $200,000 Collections during x1: $2,375,000 Allowance for doubtful accounts at 1/1/x1: $30,000 Write-offs during x1: $12,000 Recoveries: $2,000 Journal Entries: Cash Accounts Receivable Merchant Fees S a l e s Sales Returns Accounts Receivable Cash Accounts Receivable Allowance for Bad Debt
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Percentage of Sales Method Bad Debt estimated to be 0.75% of Net Credit Sales Net credit Sales: $ x R a t e % =Expense Journal Entry Bad Debt Expense Allowance for Bad Debt Financial Statements Balance Sheet Income Statement 12/31/xx FYE 12/31/xx Assets Accounts Receivable Sales Less Allowance Less Returns Net Receivables
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This note was uploaded on 03/17/2009 for the course ACC 423 taught by Professor Trinahall during the Spring '08 term at University of Phoenix.

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Chapter_7_Receivables[1] Handout - Chapter 7 Receivables...

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