ACCT 110 Lecture Notes - Lecture 28: Financial Statement, Book Value, Effective Interest Rate

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cerisehedgehog991

2 Dec 2020

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Under ifrs, a refund liability account is created. Example of differences: assume a company estimates approximately 50,000 trade receivables will be returned. Aspe: debit sales returns and allowances (contra revenue), credit allowance for sales returns and allowances (contra asset) Company estimates percentage of outstanding receivables that will become uncollectible. Used to account for estimate of impairment (gross a/r minus expected uncollectible) Uses allowance for doubtful accounts contra asset account. Adjusting entry at the end of the year to account for your estimate depends on the previous balance in the allowance for doubtful accounts account. Debit bad debt expense, credit allowance for doubtful accounts. Recognizes bad debt expense in the same period the sales revenue on account are recognized. When an account is written off (determined to be uncollectible): Debit allowance for doubtful accounts, credit accounts receivable. Collection of an account previously written off: Reverse previous: debit a/r, credit allowance for doubtful accounts.

Related Questions

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

For each item described: Identify the type of account (Asset,Liability, Equity, Revenue or Gain, Expense or Loss), normalbalance (Debit, Credit), financial statement (Balance Sheet, IncomeStatement), and whether the account is closed at the end of theperiod (Yes, No) by selecting the letter that best describes thoseattributes. If an account is a contra account, the answer will showthe account type in parentheses. Answer items may beused once, more than once, or not at all.

-	Sales & Services
-	Allowance to for Doubtful Accounts
-	Office Salaries Paid
-	Notes Payable
-	Cash
	Sales Returns & Allowances

1.	Expense or Loss, Debit, Income Statement, Yes
2.	Revenue or Gain, Credit, Income Statement, Yes
3.	Asset, Debit, Income Statement, Yes
4.	Liability, Credit, Income Statement, Yes
5.	Revenue, Credit, Balance Sheet, No
6.	(Asset), Credit, Balance Sheet, No
7.	(Revenue or Gain), Credit, Income Statement, Yes
8.	Asset, Debit, Balance Sheet, No
9.	Asset, Debit, Balance Sheet, No

raspberrytoad680

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

ACCT 110 Lecture Notes - Lecture 28: Financial Statement, Book Value, Effective Interest Rate

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