10 end 10 10 allowance for doubtful accounts 500 sale

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Unformatted text preview: ll. Beg. 15 Est. 40 End. LO 4 Explain accounting issues related to recognition of accounts receivable. Accounting for Accounts Receivable Accounting for Accounts Receivable Accounting Write­off of uncollectible accounts for $10? Write­off of uncollectible accounts for $10? Allowance for Doubtful accounts Allowance for Doubtful accounts Accounts receivable Accounts receivable Accounts Receivable Beg. 100 25 Chapter 7-30 257 333 W/O W/O Beg. 15 Coll. 10 End. 10 10 Allowance for Doubtful Accounts 500 Sale 10 10 Est. 30 End. 10 LO 4 Explain accounting issues related to recognition of accounts receivable. Accounting for Accounts Receivable Accounting for Accounts Receivable Assets Current Assets: Cash Accounts receivable, net of $30 allowance I nventory P repaids Total current assets Fixed Assets: Office equipment Furniture & fixtures Less: Accumulated depreciation Total fixed assets Total Assets Chapter 7-31 $ $ 13 227 812 40 1,092 5,679 6,600 (3,735) 8,544 9,636 LO 4 Explain accounting issues related to recognition of accounts receivable. Valuation of Accounts Receivable Valuation of Accounts Receivable Reporting Receivables Classification Valuation (net realizable value) Uncollectible Accounts Receivable Sales on account raise the possibility of accounts not being collected. Chapter 7-32 LO 5 Explain accounting issues related to valuation of accounts receivable. Valuation of Accounts Receivable Valuation of Accounts Receivable Uncollectible Accounts Receivable An uncollectible account receivable is a loss of revenue that requires, through proper entry in the accounts, a decrease in the asset accounts receivable and a related decrease in income and stockholders’ equity. Chapter 7-33 LO 5 Explain accounting issues related to valuation of accounts receivable. Valuation of Accounts Receivable Valuation of Accounts Receivable Methods of Accounting for Uncollectible Accounts Direct Write-Off Theoretically undesirable: No matching Receivable not stated at net realizable value Not GAAP Chapter 7-34 Allowance Method Losses are Estimated: Percentage­of­sales Percentage­of­receivables GAAP LO 5 Explain accounting issues related to valuation of accounts receivable. Uncollectible Accounts Receivable Uncollectible Accounts Receivable Income Income Statement Statement Approach Approach Balance Balance Sheet Sheet Approach Approach Chapter 7-35 LO 5 Explain accounting issues related to valuation of accounts receivable. Uncollectible Accounts Receivable Uncollectible Accounts Receivable Percentage-of-Sales Approach - matches costs with revenues because it relates the charge to the period in which a company records the sale. Appropriate if there is a fairly stable relationship between previous years’ credit sales and bad debts. Chapter 7-36 LO 5 Explain accounting issues related to valuation of accounts receivable. Uncollectible Accounts Receivable U...
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This document was uploaded on 02/08/2014.

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