accounting journal entries for ex2

accounting journal entries for ex2 - Collection of Note...

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Collection of Note Receivable Cash 1,035 Miscellaneous Expense 15 Notes Receivable 1,000 Interest Revenue 50 (to record collection of notes receivable by bank) Book Error Cash 36 Accounts Payable-Company 36 (to correct error in recording a check—this is an adjustment made on the books to show the correct balance) NSF Check —NSF checks become accounts receivable to the depositor Accounts Receivable—Company 425.60 Cash 425.60 (to record NSF check) Bank Service Charges Miscellaneous Expense 30 Cash 30 Direct Write-Off Method of Uncollectible Accounts —when a company determines a particular account to be uncollectible Bad Debt Expense 200 Accounts Receivable—Company 200 (to record write-off) *bad debt expense will show only actual losses from uncollectible *can reduce the usefulness of the income statement and the balance sheet *unless a company expects bad debt losses to be insignificant, the direct write-of method is not acceptable for financial reporting purposes Allowance Method—Recording Estimated Uncollectible Bad Debt Expense 12,000 Allowance for Doubtful Accounts 12,000 (to record estimate of uncollectible accounts) *expense is recorded the same year the company makes the sales *Allowance for Doubtful Accounts shows the estimated amount of claims on customers that companies expect will become uncollectible in the future Recording the Write-Off of an Uncollectible Account Allowance for Doubtful Accounts 500 Accounts Receivable—Company 500 (write-off of a company’s account) *under the allowance method, a company debits every bad debt write-off to the allowance account and not to Bad Debt Expense *a write-off only affects the balance sheet accounts *cash realizable value in the balance sheet, remains the same Recovery of an Uncollectible Account Accounts Receivable 500 Allowance for Doubtful Accounts 500
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(to reverse the write-off of the company’s account) Cash 500 Accounts Receivable—Company 500 (to record collection from company) *sometimes a company collects from a customer after the account had been written off as uncollectible *companies must make two entries to record the recovery of a bad debt
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This note was uploaded on 03/30/2008 for the course ACCT 100 taught by Professor Punke during the Fall '08 term at Wisconsin.

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accounting journal entries for ex2 - Collection of Note...

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