ACCT 211 Chapter 6: Chapter 6 Fact Sheet

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tealraccoon797

19 Jul 2016

School

Binghamton University

Department

Accounting

Course

ACCT 211

Professor

Elliot Kamlet

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Document Summary

Accounts receivable: a company"s claim on the assets of another entity. Not all receivables are collected = bad debts. Bad debt expense is considered an operating expense and is usually combined with other expenses on the income statement. Net realizable value: is the amount of cash that a company expects to collect from its total or gross accounts receivable balance. Uncollectible account: a specific amount of receivables that is written off (the company has recognized that they will not receive the cash from the customer) Two methods: direct write-off method & the allowance method: timing: the method used will determine when to recognize the bad debt expense (1) establish account receivable: Accounts receivable . 3012130121$ (3) customer pays with a sales discount: Sales 3012130121$ (2) company determines that it will be unable to collect the money: What"s wrong with this method? (1) fails to match expenses with revenue (2) allows companies to manipulate earnings by period.

Related Questions

6. The bad-debt method that uses the accounts receivable agingreport is _______________.

	the bad-debt expense method
	the percentage-of-sales method
	the direct write-off method
	the percentage-of-receivables method

7. When it is determined that too much money has been set asidefor uncollectible accounts, we will _______________.

	credit reserve for uncollectible accounts
	debit accounts receivable
	credit cash
	debit reserve for uncollectible accounts

8. A customer whose account was previously written offunexpectedly pays us. If we are using the allowance method we would_______________.

	debit accounts receivable and credit allowance for uncollectibleaccounts AND debit cash and credit accounts receivable
	debit cash and credit bad-debt expense
	debit reserve for uncollectible accounts and credit cash
	debit bad-debt expense and credit cash

9. When a retailer accepts a bank card (VISA or MasterCard),they will make what entry for the dayâs receipts?

	debit cash and debit âcredit card expenseâ; credit sales
	debit accounts receivable and credit sales
	debit cash and credit sales
	debit accounts receivable; credit sales, and credit âcredit cardexpenseâ

mauvemarten239

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the companyâs fiscal year-end. The 2017 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $48,000 $ 522,000 During 2018, credit sales were $1,840,000, cash collections from customers $1,920,000, and $57,000 in accounts receivable were written off. In addition, $4,800 was collected from a customer whose account was written off in 2017. An aging of accounts receivable at December 31, 2018, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible 0â60 days 70 % 5 % 61â90 days 20 15 91â120 days 5 20 Over 120 days 5 40 Required: 1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: Bad debt expense is estimated to be 4% of credit sales for the year. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable. 3. For situations (a)â(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

pinkantelope545

Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $151,000 Credit sales, $451,000 Selling and administrative expenses, $111,000 Sales returns and allowances, $31,000 Gross profit, $491,000 Accounts receivable, $120,000 Sales discounts, $15,000 Allowance for doubtful accounts credit balance, $1,300 Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

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ACCT 211 Chapter 6: Chapter 6 Fact Sheet

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