Chapter_7_Lecture_4_Notes_receivable - Chapter7Lecture4

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 Lecture 4 Notes Receivables and Interest Calculations Consider this set of transactions: We have beginning balances in accounts  receivable of $430,000 and in the allowance of $31,400.  The following are  summary journal entries:  Debit   Accounts Receivable              $3,200,000            Credit   Sales                                             $3,200,000                          Sales on account for year  Debit    Cash                                     $2,950,000            Credit  Accounts Receivable                       $2,950,000                         Collections on accounts for the year.  Debit    Allowance for Bad Debts      $     35,000            Credit  Accounts Receivable                     $    35,000                        Write offs of uncollectible accounts  After these transactions are journalized and posted, there is a  debit balance in  the allowance for bad debts totaling $3,600.   Again, a debit balance in the  allowance is indicative of a low estimate of uncollectibles in a prior adjustment. In  other words, the company wrote-off more accounts than they had expected to  write off.  If the  percent of sales method  is used, given the 1.2% estimate derived by 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/10/2011 for the course ACCOUNTING 201 taught by Professor Notsure during the Spring '11 term at Edmonds Community College.

Page1 / 3

Chapter_7_Lecture_4_Notes_receivable - Chapter7Lecture4

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online