ACTG 1P12 Lecture Notes - Lecture 3: Subledger, General Ledger, Accounts Payable

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lemonbeetle162

1 Feb 2016

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For merchandise return: dr sales returns and allowances and cr a/r. To record collection and discount: dr cash and sales discount and cr a/r. A subsidiary ledger group of accounts that provides detail of a control account in the. A control account is an account in the general ledger that summarizes the detail for a general ledger subsidiary ledger and controls it. Credit loses from uncollectible receivables are dr to bad debts expense. Allowance method a method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period. Dr bad debts expense and cr afda. Most common is to use a percentage of outstanding receivables to determine the. Aging the accounts receivable stratifying the percentage classifies customer balances by the length of time they have been unpaid, which can improve the reliability of the estimate. Accounts receivable x estimated percentage uncollectible = estimated uncollectible.

Related Questions

21 In 2007, Corey Company had service revenue of $1.0 million dollars, half of which represented an accounts receivable and half was paid in cash. At year end its A/R totaled $120,000 and its allowance for doubtful accounts had a $1,500 credit balance. Record the necessary journal entry 12/31/07 if: Big Bucks estimates 1.5% of credit sales are uncollectible. a. No entry required. b. Dr. Bad Debts $1,500 Cr Allowance for doubtful accounts $1,500.00 c. Dr. Bad Debts $300 Cr Allowance for doubtful accounts $300.00 d. Dr. Bad Debts $15,000 Cr Allowance for doubtful accounts $15,000.00 e. None of the above. The correct answer is 'c'.

If the allowance method of accounting for uncollectible receivables method was used and an estimate was made at year end, Dec.31 ........what general ledger accounts are debited and credited in JANUARY when a particular customer's account is identified as uncollectible?

debit Allowance for Bad Debts; credit Accounts Receivable

debit Bad Debts Expense; credit Accounts Receivable

debit Bad Debts Expense; credit Allowance for Bad Debts

debit Bad Debts Expense; credit Allowance for Bad Debts: incorrect.

debit Accounts Receivable; credit Allowance for Bad Debts

bluemuskrat927

The ledger of Sairu Company at the end of the current year shows Accounts Receivable $195,000, Sales Revenue $1,800,000, and Sales Returns and Allowances $60,000.

Instructions:

(a) If Sairu uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Sairu determines that Mashfi's $2,500 balance is uncollectible.

(b) If Allowance for Doubtful Accounts has a credit balance of $3,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable.

(c) If Allowance for Doubtful Accounts has a debit balance of $590 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable.

peachturtle861

ACTG 1P12 Lecture Notes - Lecture 3: Subledger, General Ledger, Accounts Payable

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