Business Administration 2257 Chapter Notes - Chapter 8: Subledger, General Ledger, Operating Expense
25 Sep 2015
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If customer doesn"t pay in full within specified period of time, interest/financing charge added to balance due: dr. a/r and cr. Thursday, september 24, 2015: contra asset w/ credit balance, contra asset account used b/c, don"t know which individual customers won"t pay, amount in allowance for doubtful accounts is estimate. Net realizable value= account receivable allowance for doubtful accounts: when allowance for doubtful accounts is ed, bad debts expense is recorded, bad debts expense is recorded in same period as related sales. 3 features of allowance method: recording estimated uncollectible accounts. Any to allowance balance also recorded in bad debts expense account: recording the write-off of uncollectible account. Written off at time specific account determined to be uncollectible. A/r and allowance for doubtful accounts: recording recovery of uncollectible account. Original write-off is reversed and collection recorded. Recording estimated uncollectible accounts: record estimate dr. bad debts expense, cr.
