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W5_Outline - Accounting 306 Intermediate Accounting I...

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Accounting 306 Intermediate Accounting I Workshop 5 Outline I. What types of items (other than currency and coins) are classified as cash? II. Distinguish between accounts receivable and notes receivable. III. Sales discounts a. Why do companies offer cash or sales discounts? b. What does 1/10, n/30 mean? What does 3/15, n/60 mean? c. Methods of accounting for sales discounts i. Gross method ii. Net method IV. Uncollectible accounts receivable a. Methods for recording uncollectibles i. Direct write-off method 1. Why is this method not approved by GAAP?
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2. What entry is made at the time a specific account is determined to be uncollectible? ii. Allowance method 1. What is the rationale behind the allowance method? 2. What type of account is “Allowance for doubtful accounts?” What is its normal balance? 3. What entry is made to record estimate of bad debt expense? It depends on the approach used! a. Percentage-of-sales approach i. Income statement focus ii.
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