Chapter_8_Receivables

Chapter_8_Receivables - Chapter 8 Receivables Receivables...

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Receivables Receivables Accounts Receivable, open book accounts. Notes Receivable, a promissory note, the unconditional promise to pay, a set amount, at a definite time and the maker’s signature. Other receivables include interest receivable, receivables from employees. Uncollectible Accounts The Direct Write-Off Method The Allowance Write off Method. Percentage of credit sales. Aging of receivables. The Direct Write-Off Method . When an account is identified an uncollectible it is written off. Bad Debt Expense 100 Accounts Receivable; Customer 100. If the customer comes in later to pay I must first reinstate the account and then collect the account. Accounts Receivable; Customer 100 Bad Debt Expense 100 We credited the expense because we are reducing it. Then collect the account. Cash 100 Accounts Receivable; Customer 100. Other names for Bad Debt Expense are Uncollectible Account Expense or Doubtful Accounts Expense. The only problem with the direct write-off method is it may not match Sales revenue with Bad Debt Expense. Dec. 31 2010 The Allowance Method. The allowance method takes the Bad Debt Expense at the end of the year with the Sales. This matches expense to revenue. Since I do not know with accounts will go bad the amount of the write-off is an estimate. Since I can not write off any account in the Accounts Receivable Subsidiary Ledger I can not credit Accounts Receivable. The Allowance for Uncollectible Accounts stores the credit until I know what account to write-off. Sales
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This note was uploaded on 02/22/2011 for the course ACCT 2021 taught by Professor Leonard during the Spring '11 term at St. Petersburg College.

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Chapter_8_Receivables - Chapter 8 Receivables Receivables...

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