ACG 2021 Study Guide - Final Guide: Clip Art, Matching Principle, Accounts Receivable

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lemoncamel904

4 Apr 2016

School

University of Florida

Department

Accounting

Course

ACG 2021

Professor

Garvin Debbie

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Document Summary

Layman"s terms: allowance for uncollecible accounts & uncollecible account expense: diference between the allowance and the expense. If i had to choose an account that is the misunderstood rebel in accouning it"d be the allowance for. There are a lot of misconcepions as to what this account means, what all the journal entries involving this account means, the methods used, etc. So just to start the discussion started, let"s just cover what the allowance for doubful accounts is not: It"s not cash that we set aside in-case we don"t collect from customers. It"s not the amount we haven"t collected (that"s what the overall receivable represents) It"s not some ine or expenditure we pay because we didn"t collect from customers. What the allowance account is an esimaion of the value of our accounts receivable that we don"t expect to collect. That"s it an esimaion, nothing more, nothing less: diference between the allowance and the expense.

Related Questions

Adham Sdn. Bhd. accounts for its uncollectible accounts usingthe allowance method. The company reported the following accountbalances at 31 December 2017.

	RM
Accounts receivable	250,000
Less: Allowance for doubtful accounts	12,500

During the year 2017, the company had the following transactionsrelated to receivables.

	RM
1.Credit sales	600,000
3.Collections of accounts receivable	680,000
4.Write-offs of accounts receivable	10,800
5.Recovery of bad debts previously written off	3,000

Required:

a) Journalise transactions 1 - 5 above.

b) Post the entries to the two accounts: Accounts receivable andAllowance for doubtful account.

c) Record the bad debt expense for 2017 (in T-account) undereach of the following independent assumptions:

i. The company estimates its bad debt expense based on 5% ofoutstanding account receivable balance.

ii. The company bad debt estimate is 1% of its credit sales.

d) What is the net realisable value of Accounts Receivable at 31December 2017 under assumption (i) above.

carminesalmon51

Swathmore Clothing Corporation grants its customers 30 daysâcredit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 3% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly. At the end of 2015, accountsreceivable were $574,000 and the allowance account had a creditbalance of $54,000. Accounts receivable activity for 2016 was asfollows: Beginning balance $ 574,000 Credit sales 2,620,000Collections (2,483,000) Write-offs (68,000) Ending balance $643,000 The companyâs controller prepared the following agingsummary of year-end accounts receivable: Summary Age Group AmountPercent Uncollectible 0â60 days $ 430,000 4 % 61â90 days 98,000 1591â120 days 60,000 25 Over 120 days 55,000 40 Total $ 643,000

What is total bad debt expense and accounts receivable (net) for2016?

ultramarinecod246

What is total bad debt expense and accounts receivable (net) for2016?

greygrasshopper170

ACG 2021 Study Guide - Final Guide: Clip Art, Matching Principle, Accounts Receivable

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