Ch+08+Edited

Net realizable value uncollectible accounts

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Unformatted text preview: count raise the possibility of accounts not being collected. Seller records losses that result from extending credit as Bad Debts Expense. SO 3 Describe the methods used to account for bad debts. Valuing Accounts Receivable Valuing Accounts Receivable Methods of Accounting for Uncollectible Accounts Direct Write-Off Theoretically undesirable: Allowance Method Losses are estimated: No matching. Better matching. Receivable not stated at net realizable value. Receivable stated at net realizable value. Not acceptable for financial reporting. Required by GAAP. 8-10 SO 3 Describe the methods used to account for bad debts. Accounting for A/R and Bad Debts Accounting for A/R and Bad Debts How are these accounts presented on the Balance Sheet? How are these accounts presented on the Balance Sheet? Accounts Receivable Allowance for Doubtful Accounts Beg. 500 25 Beg. End. 500 25 End. 8-11 Assets Assets Assets Current Assets: Current Assets: Cash Cash Accounts receivable Accounts receivable Less allowance for doubtful accounts Less allowance for doubtful accounts Less Less Inventory Inventory Prepaids Prepaids Total current assets Total current assets Fixed Assets: Fixed Assets: Office equipment Office equipment Furniture & fixtures Furniture & fixtures Less: Accumulated depreciation Less: Accumulated depreciation Total fixed assets Total fixed assets Total Assets Total Assets Total Total 8-12 500 500 25 25 $ 346 $ 346 475 475 812 812 _ 40 _ 40 1,673 1,673 5,679 5,679 6,600 6,600 ((3,735) 3,735) 8,544 8,544 $10,217 $10,217 Assets Assets Assets Current Assets: Current Assets: Cash Cash Accounts receivable, net of $25 allowance Accounts receivable, net of $25 allowance for doubtful accounts for doubtful accounts Inventory Inventory Prepaids Prepaids Total current assets Total current assets Fixed Assets: Fixed Assets: Office equipment Office equipment Furniture & fixtures Furniture & fixtures Less: Accumulated depreciation Less: Accumulated depreciation Total fixed assets Total fixed assets Total Assets Total Assets Total Total 8-13 $ 346 $ 346 475 475 812 812 _ 40 _ 40 1,673 1,673 5,679 5,679 6,600 6,600 ((3,735) 3,735) 8,544 8,544 $10,217 $10,217 Accounting for A/R and Bad Debts Accounting for A/R and Bad Debts Accounting Journal entry for credit sale of $100? Journal entry for credit sale of $100? Accounts receivable Accounts receivable Sales Sales Accounts Receivable 100 100 100 100 Allowance for Doubtful Accounts Beg. 500 25 Beg. End. 500 25 End. 8-14 Accounting for A/R and Bad Debts Accounting for A/R and Bad Debts Journal entry for credit sale of $100? Journal entry for credit sale of $100? Accounts receivable Accounts receivable Sales Sales Accounts Receivable Beg. 500 Sale 600 100 100 Allowance for Doubtful Accounts 100 End. 100 100 8-15 25 Beg. 25 End. Accounting for A/R and Bad Debts Accounting for A/R and Bad Debts Collected of $333 on account? Collected of $333 on account? Cash Cash Accounts receivable Accounts receivable Accounts R...
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This note was uploaded on 09/27/2013 for the course MGT 11A taught by Professor Armstrong during the Fall '08 term at UC Davis.

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