ch 8 questions.docx

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Business Administration
Course Code
Business Administration 2257
Milford Green

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Chapter 8, Session 4 Assignment: Chapter 8 Q: 6, 8, 10, 11, 12 BE: BE8-6* E: E8-3* 6) a) A4DA: A contra-asset account that records the portion of a company's receivables, which it expects may not be collected. It’s estimated based on historical trends, of how much a company believes will be uncollectible. It can be estimated in a number of different ways such as percentage of sales, or by setting up a receivables aging schedule. Purpose: Companies predict the amount of receivables from customers that won’t be received. This is to anticipate and safeguard the business by creating a cushion for bad debt expenses; creating a comfortable scenario of customer payables that are not unpaid. b) Allowance for Doubtful Accounts (A4DA) has a normal credit balance as it is a contra asset: HOWEVER, allowance for doubtful accounts may have a debit balance if the amount written off is larger than previously estimated. 8) ? 10) Recovering an Account Previously Written Off > Recovery: Re-instating and collecting an account receivable that had been previously written off as worthless. Two separate journal entries are needed: First, the business must reinstate the customer’s account by reversing the write-off process. Next, the colle
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