Chapter 8 Notes - Accounting Basics I.docx - Accounting...

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Accounting Basics I – Chapter 8 NotesClass OLRN1715 – Accounting Principles IAll about accounts receivableCalculating uncollectible accounts receivables.Two methods:oPercentage of A/R balanceoPercentage of Sales RevenueTwo new accounts introduced:Allowance for doubtful accounts, contra account or offset account toA/R.sits on the balance sheet and is a credit balance, reducing tovalue of the A/R accountBad Debt expense – an expense account on the income statement.Represents the value of A/R not collected due to whatever reason. Endresult is customer failed to pay for the product they purchased thatwas charged on accountAnd lastly, the terminology of “unadjusted credit balance”.This means thisvalue reduces the amount allowance for doubtful account calculated in eithermethod.Example:0 – 30 days A/R outstanding = 85,000estimated 5% will be uncollected31-60 days A/R outstanding = 25,000 estimated 15% will be uncollected

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Term
Fall
Professor
NoProfessor
Tags
Balance Sheet, Revenue, Expense, Double entry bookkeeping system

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