chapter 17 uncollectible accounts. 2 estimating and recording uncollectible accounts expense page...
TRANSCRIPT
CHAPTER 17CHAPTER 17
Uncollectible Accounts
2
ESTIMATING AND RECORDING ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS EXPENSEUNCOLLECTIBLE ACCOUNTS EXPENSE page 515
EstimatedUncollectible
Accounts Expense=Percentage×
Total Saleson Account
$12,873.30=1.0%×$1,287,330.00
When you sell on account you take the risk that a customer will not pay.
Uncollectible Accounts - Accounts receivable that cannot be collected.•This risk is a cost of doing business that should be recorded as an in the same accounting period the revenue is earned.
We cannot predict which exact accounts will be uncollectible - if so, we could credit each accounts receivable account. So we estimate. Estimating accomplishes two objectives:
3ANALYZING AND JOURNALIZING AN ANALYZING AND JOURNALIZING AN ADJUSTMENT FOR UNCOLLECTIBLE ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSEACCOUNTS EXPENSE
11
22
page 516
33 33
1. Enter and label credit amount.
2. Enter and label debit amount.
3. Record adjusting entry.
4
POSTING AN ADJUSTING ENTRY FOR POSTING AN ADJUSTING ENTRY FOR UNCOLLECTIBLE ACCOUNTS EXPENSEUNCOLLECTIBLE ACCOUNTS EXPENSE page 517
11 22
1. Debit
2. Credit
LESSON 17-2LESSON 17-2
Writing Off and Collecting Uncollectible Accounts Receivable
6
JOURNALIZING WRITING OFF AN JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLEUNCOLLECTIBLE ACCOUNT RECEIVABLE
11
page 519
January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1,621.00. Memorandum No. 3.
1. Debit2. Credit and customer’s name
22 22
7
2. Post the credit amount to general ledger.
POSTING AN ENTRY TO WRITE OFF AN POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLEUNCOLLECTIBLE ACCOUNT RECEIVABLE
44
page 520
11
22
33
1. Post the debit amount to general ledger.
3. Post the credit amount to customer account.
4. Write Written off in the customer account.
8
REOPENING AN ACCOUNT REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFFPREVIOUSLY WRITTEN OFF
1. Enter a debit to Accounts Receivable. Place a diagonal line in the Post. Ref. column.
22
page 521
January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12.
2. Enter a credit to Allowance for Uncollectible Accounts.
1111
9
RECORDING CASH RECEIVED FOR AN RECORDING CASH RECEIVED FOR AN ACCOUNT PREVIOUSLY WRITTEN OFFACCOUNT PREVIOUSLY WRITTEN OFF page 522
January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12.
10
3. Write the words Reopen account in the Item column of the customer account.
POSTING ENTRIES FOR COLLECTING A POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLEWRITTEN-OFF ACCOUNT RECEIVABLE page 523
33
22
1111
44
1. Post the general journal entry to the general ledger.
2. Post the debit portion of the general journal entry to the customer account.
4. Post the cash receipts journal entry to the customer account.