ADM 1340 Study Guide - Final Guide: Promissory Note, Debits And Credits, Accounts Receivable
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ADM 1340 Full Course Notes
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A receivable is reduced when cash is collected, a sales discount is taken, or the merchandise is returned by the customer. Bank credit/debit card transactions are recorded as cash while nonbank (company) credit cards are recorded as accounts receivable. Subsidiary ledger is a group of accounts that share a common characteristic (i. e. accounts receivables) The single accounts receivable account in the general ledger is the control account. Losses from uncollectible accounts are debited to the bad debts expense account. Allowance for doubtful accounts is a contra asset account shown below accounts receivable and is an estimation of the uncollectible accounts. Actual accounts are written off when they are determined to be uncollectible. Recording the recovery of an uncollectible (2 separate entries): Notes receivable are a credit instrument that normally requires the payment of interest and extends for time periods greater than 30 days. They have a stronger legal claim to assets than accounts receivable; written promise (promissory note) to repay.