Chapter 7-powerpoint-class

Chapter 7-powerpoint-class - CHAPTER 7 Reporting and...

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Reporting and Analyzing Receivables C H A P T E R 7
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RECEIVABLES Amounts Due from another party. Most common receivables are: 1. Accounts Receivable 2. Notes Receivable
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Accounts Receivable Amounts due from customers for credit sales. Credit sales require: Maintaining a separate account receivable for each customer. Accounting for bad debts (uncollectible accounts) that result from credit sales.
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CREDIT SALES 1.Direct Credit Sales to Customers 2.Credit Card Sales
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On Feb 13, UGA Company sells $500 of merchandise on credit to Jack, and $700 of merchandise on credit to Jill Sales on Credit to Customers
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On Feb 23, UGA Company collects $300 from Jack and $400 from Jill on account. Sales on Credit to Customers
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With bank credit cards, the seller deposits the credit card sales receipt in the bank just like it deposits a customer’s check. The bank increases the balance in the company’s checking account. The company usually pays a fee of 1% to 5% for the service. Credit Card Sales
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Credit Card Sales Accounting for Credit Card Sales depends upon when Cash will be received from the Sale….. 1. Immediate on deposit of Credit Card Receipt. OR 2. Delayed until Credit Card Company makes payment.
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On Feb 13, UGA Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. The cash is received immediately. Credit Card Sales Immediate Payment…..
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On Feb 13, UGA Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. UGA remits the credit card sale to the credit card company and waits for the payment that is received on Feb 25. Credit Card Sales Wait for Payment….
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Valuing Accounts Receivable Some customers may not pay their account. Uncollectible amounts are referred to as…………..When an account receivable becomes uncollectible, a firm incurs a bad debt loss.
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Accounting for Uncollectible Accounts 2 Methods: Direct Write off Allowance Method
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Direct Write-Off Method Write off an account receivable as uncollectible when it is deemed to be uncollectible.
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On Jan 1, we determine that we cannot collect $400 from Mr. Bad Guy, a credit customer. Direct Write-Off Method To write off a customer’s account
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On April 1, Mr. Bad Guy decides to pay $200.
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