Lec7_2008 - Receivables and Revenue Recognition I...

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Receivables and Revenue Recognition I. Allowances for Uncollectible Accounts - % of Sales-Method 1 - Aging-Method 2
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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 % of Sales - use past experience to estimate % uncollectible. - make adjusting entry to reduce Sales Revenue and Accounts Receivable Bad Debt Expense $xx Allowance for Uncollectibles(XA) $xx
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Allowances for Uncollectible Accounts Cont’d. Adjust Sales and Receivables for Expected Uncollectibles Bad Debt Expense $xx Allowance for Uncollectibles(XA) $xx When it is Determined that a Specific Account is Uncollectible Allowance for Uncollectibles(XA) $xx Account Receivable $xx
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E6-8
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Aging of Accounts Receivable - periodically examine outstanding (delinquent) accounts and revise estimates, making any necessary adjustment:
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E6 -14 E6-18 E6-21 E6-25 P6-1 P6-7
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Inventories
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Cost Flow Assumptions I. Inventory Cost Flow Assumptions -- FIFO ,LIFO and Weighted Average
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Why do inventories exist?
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