ACCO 230 Lecture Notes - Lecture 5: Bank Statement, Bank Reconciliation

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purpleferret538

26 Oct 2016

School

Concordia University

Department

Accountancy

Course

ACCO 230

Professor

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Net sales = sales revenue sales discounts - returns and allowances - credit card discounts. Bad debt (debit) and the accounts receivable (credit) accounts. How do companies estimate the amount that should be in their allowance for bad debt account: percent of credit sales based on historical uncollectible amounts. : aging of accounts receivable - accounts of each customer grouped according to the amount of time since sale was made. Uncollectible estimates calculated as percentages for each time period based on historical uncollectibles. Percentages are applied to the total in each time period: journal entry when it is reasonably assumed that a specific amount will not be collected (called writing off): Bank reconciliation the difference between cash in the company"s books and cash on the bank statement: balance on bank statement must equal balance on books. Balance on bank statement + deposits in transit outstanding checks +/- bank.

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

32. The following information was abstracted from the 2016 financial statements of Jennings Company:

Sales (cash and credit) ...............................................	$747,000	*
Accounts Receivable, December 31, 2016 ..............	128,000
Allowance for Doubtful Accounts .....................	1,000	debit balance
Sales discounts .....................................	18,000	*
Sales returns .......................................	12,400	*
30% of sales are credit sales ........................ Sales discounts and returns should be deducted to determine net sales.

a. Prepare the adjusting entry for doubtful accounts expense under each of the following assumptions:

(1)	5 percent of current accounts receivable are uncollectible, (remember the debit balance of $1,000).
(2)	3 percent of credit sales are uncollectible.

(3) Joe Smith a customer with a balance of $1,200 is bankrupt and the auditor informs you to write off the account as a bad debt.

salmondeer884

The Trade Federation releases this information for the fiscalyear:

Sales: $47,300,000

Sales Discounts: $500,000

Sales Returns & Allowances: $700,000

Outstanding Accounts Receivable (at end of FY): $7,480,000

Allowance for Doubtful Accounts (before adjustments): $7,900 credit

1. Assume the Trade Federation uses the percent salesmethod and estimates that 0.75% of NET Sales will beuncollectable.

A. Complete the journal entry necessary at the end ofthe fiscal year, December 31, to record bad debtexpense.

Date	Account	A.	Debit	Credit

2. What amount would NET receivables be reported on thebalance sheet?

cyanrat279

ACCO 230 Lecture Notes - Lecture 5: Bank Statement, Bank Reconciliation

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