Chapter 07

Chapter 07 - Chapter7Receivablesand Investments Credit...

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Chapter 7--Receivables and  Investments
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Credit Sales Slows inflow of cash Risk of uncollectible accounts But…absolutely unavoidable Some commons creditors Trade Credit Retail Customer Receivables Terms: 2/10, net 30 Sales Invoice LO2
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Apple’s Consolidated Balance Sheets (Partial) (amounts in millions) 2006 2005 Accounts receivables, less allowances of $52 and $46, respectively $1,253 $895 Net Realizable Value Estimated Uncollectible Accounts
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Accounting for Bad Debts: Direct Write-off Method (The ONLY method allowed by the IRS) Journal entry to record write-off in period determined to be uncollectible: Bad Debts Expense XXX Accounts Receivable—Dexter XXX Future period charged with expense of bad debt write-off—bad matching
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Accounting for Bad Debts: Allowance Method (The ONLY method allowed by GAAP) Estimated bad debt expense (and allowance account) recorded in the same period
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Accounting for Bad Debts: Allowance Method Journal entry to record estimated bad debt expense in period of sale: Bad Debts Expense XXX Allowance for Doubtful Accounts XXX I estimate. ..
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Maisson Derriere Corp. Partial Balance Sheet Accounts receivable $250,000 Less: Allowance for doubtful accounts 6,000 Net accounts receivable $244,000 Balance Sheet Presentation – Allowance Method
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Accounting for Bad Debts: Allowance Method
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This note was uploaded on 04/13/2011 for the course ACCT 2101 taught by Professor Christianwurst during the Spring '08 term at Temple.

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Chapter 07 - Chapter7Receivablesand Investments Credit...

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