31 chapter 8 11 baddebtsexpense 12000

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Unformatted text preview: luing Accounts Receivable Illustration: Assume that Hampson Furniture has credit sales of $1,200,000 in 2010, of which $200,000 remains uncollected at December 31. The credit manager estimates that $12,000 of these sales will prove uncollectible. Dec. 31 Chapter 8-11 Bad debts expense 12,000 Allowance for doubtful accounts 12,000 SO 3 Describe the methods used to account for bad debts. Valuing Accounts Receivable Valuing Accounts Receivable Illustration 8-3 P re s e nta tio n o f a llo wa nc e fo r d o u b tfu l a c c o u nts Chapter 8-12 SO 3 Describe the methods used to account for bad debts. Valuing Accounts Receivable Valuing Accounts Receivable Recording Write-off of an Uncollectible Account Illustration: Assume that the vice­president of finance of Hampson Furniture on March 1, 2011, authorizes a write­off of the $500 balance owed by R. A. Ware. The entry to record the write­off is: Mar. 1 Allowance for doubtful accounts Accounts receivable 500 500 Illustration 8-4 Chapter 8-13 SO 3 Describe the methods used to account for bad debts. Valuing Accounts Receivable Valuing Accounts Receivable Recovery of an Uncollectible Account Illustration: Assume that on July 1, R. A. Ware pays the $500 amount that Hampson Furniture had written off on March 1. Hampson makes these entries: Jul. 1 Accounts receivable 500 Allowance for doubtful accounts 1 Cash 500 Accounts receivable Chapter 8-14 500 500 SO 3 Describe the methods used to account for bad debts. Valuing Accounts Receivable Valuing Accounts Receivable Estimating the Allowance Under the percentage of receivables basis, management establishes a percentage relationship between the amount of receivables and expected lo...
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