BMGT 220 Chapter 7-1

BMGT 220 Chapter 7-1 - CHAPTER 7 Reporting and Reporting...

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Reporting and Analyzing Receivables Reporting and Analyzing Receivables C H A P T E R 7
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Accounts Receivable Amounts due from customers for credit sales. Credit sales require: Maintaining a separate account receivable for each customer. Accounting for bad debts (uncollectible accounts) that result from credit sales.
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On Feb 13, UMD Company sells $500 of merchandise on credit to Jack, and $700 of merchandise on credit to Jill On Feb 13, UMD Company sells $500 of merchandise on credit to Jack, and $700 of merchandise on credit to Jill Sales on Credit
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On Feb 23, UMD Company collects $300 from Jack , and $400 from Jill on account. On Feb 23, UMD Company collects $300 from Jack , and $400 from Jill on account. Sales on Credit
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On Feb 13, UMD Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. The cash is received immediately. On Feb 13, UMD Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. The cash is received immediately. Credit Card Sales
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On Feb 13, UMD Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. UMD remits the credit card sale to the credit card company and waits for the payment that is received on Feb 25. On Feb 13, UMD Company has a bank credit card sale of $500 to a customer. The bank charges a processing fee of 2%. UMD remits the credit card sale to the credit card company and waits for the payment that is received on Feb 25. Credit Card Sales
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Knowledge Check Question 1: Ace Company has an agreement with a major credit  card company which calls for cash to be received  immediately upon electronic deposit of Ace  customers’ credit card sales receipts.  The credit card  company receives 3.5% of card sales as its fee.  If Ace  has $2,000 in credit card sales on a given day, which  of the following statements are true?   1. Ace debits Cash $1,930. 2. Ace debits Accounts Receivable – Credit Card Co $2,000. 3. Ace debits Accounts Receivable – Credit Card Co $1,930. 4. Ace credits Sales Revenue $1,930.
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Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. When an account receivable becomes uncollectible, a firm incurs a bad debt loss. There are two methods of dealing with bad debts: Direct Write-Off Method Allowance Method Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. When an account receivable becomes uncollectible, a firm incurs a bad debt loss. There are two methods of dealing with bad debts: Direct Write-Off Method Allowance Method Valuing Accounts Receivable
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On Jan 1, we determine that we cannot collect $400 from Mr. Bad Guy, a credit customer.
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BMGT 220 Chapter 7-1 - CHAPTER 7 Reporting and Reporting...

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