Ch 8 Textbook PagesWatch Chapter 8 Videos and take notes
- Accounts Receivable (14:51)
- Direct Write Off & Percentage of Sales(9:20)
- % of A/R & A/R Aging (7:21)
- Notes Receivable (6:00)
Notes:
uncollectible acct exp
Sales on Credit
complications and costs
Why sell on credit
increase sales, increase net income, also increases
costs
Bad Debt Loss / Uncollectible Acct Expense
write off balance (during period at time account is
determined to be uncollectible)
Direct Write off (simplest) debit uncollectible acct
exp credit A/R [Not allowed under GAAP]
violates the matching principle
distorts Net Income and Assets
Allowance (adjusting enty)
debit Uncollectible Account Expense
credit Allowance for Uncollectible Accounts (Contra
Asset)
[Can’t credit
A/R b/c don’t know who won’t pay us]
Net Realizable
Value (Net A/R) = A/R minus Allowance
estimates bad debt
(adjusting entry at end of period)
percentage
of net sales (or net credit sales)
determines
write off amount
Aging
(Analysis) of A/R
brings
Allowance up to date
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