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Chapter_7_Lecture_4_Notes_receivable

# Chapter_7_Lecture_4_Notes_receivable - Chapter7Lecture4 :...

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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

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Chapter_7_Lecture_4_Notes_receivable - Chapter7Lecture4 :...

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