ACC 100 Chapter Notes - Chapter 7: Subledger, Accounts Receivable, General Ledger

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lilaceel244

21 Nov 2013

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Subsidiary ledger: tracks the balance owed by each customer; the detail for a number of individual items that collectively make up a single general ledger account. Control account: the general ledger account that is supported by a subsidiary ledger. Subsidiary ledger does not take the place of the control account in the general ledger. Direct write-off method: the recognition of bad debts expense at the point an account is written off as uncollectible. Under direct write-off method, an expense increases, and under the allowance method an allowance account is reduced. When an individual wants to restore his credit and pays back, there are 2 adjusting entries: previously written-off account is reversed, the collection of cash from the individual is recorded. Bad debts expense decrease (expense) ( to calculate, get the percentage of the credit under a/c less the balance in doubtful. Allowance for doubtful accounts decreases (asset: aging of accounts receivable.

Related Questions

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

4. The direct write-off method for uncollectible accounts violates the GAAP matching principle, and is primarily used by smaller, nonpublic companies. TRUE FALSE

5. The Allowance for Bad Debts is a contra asset account to Accounts Receivable. TRUE FALSE

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

ACC 100 Chapter Notes - Chapter 7: Subledger, Accounts Receivable, General Ledger

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