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Chapter 7

Chapter 7 - ACC100 - Accounts Receivable Notes.docx

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Department
Accounting
Course
ACC 100
Professor
Cheryl Dyson
Semester
Fall

Description
ACC100 Chapter 7 Textbook Notes Oct 31 13  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.  Allowance method: A method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period. o Accounts receivable is reduced through a contra-asset account to account for uncollectible credit, o Contra-asset – Less: Allowance for doubtful accounts  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: o Previously written-off account is reversed o The collection of cash from the individual is recorded  Two approaches to the allowance Method for Bad Debts o Percentage of Net Credit S
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