FINance - Copyright Doug Hillman 2000 Accounts Receivable...

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Unformatted text preview: Copyright Doug Hillman 2000 Accounts Receivable and Bad Debts Expense Copyright Doug Hillman 2000 Receivables on Balance Sheet Trade receivables Arise from sale of goods or services to customers Nontrade receivables Arise from other sources Copyright Doug Hillman 2000 Bad Debts Expense An account receivable that proves uncollectible Accrual accounting requires that we recognize the bad debts expense in the same period as the sales revenue Since we may not know at end of period which accounts will be uncollectible, we must estimate the amount Use allowance method Copyright Doug Hillman 2000 Recording Bad Debts Adjustment Estimate and record amount in an end- of-period adjustment Estimate uncollectible amount Record increase in expense and decrease in accounts receivable Since specific uncollectible account not known, use contra account Allowance for Doubtful Accounts Copyright Doug Hillman 2000 Balance Sheet Presentation...
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This note was uploaded on 02/11/2011 for the course ACG 2021 taught by Professor Mcdonald during the Spring '08 term at University of Florida.

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FINance - Copyright Doug Hillman 2000 Accounts Receivable...

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