Chapter 8 Conceptual
Give an advantage of extending credit
Increased Revenues!
What is the debit in the journal entry to record a bad debt
Bad Debt Expense
Write the A/R T chart on the whiteboard
Maddie
Give 3 examples of tangible assets
Property (land), plant (buildings), equipment
Give 2 disadvantages of extending credit
Increased wage costs
Bad debt costs
Delayed receipt of cash
What is the credit to record bad debt expense?
Allowance for Doubtful Accounts
Write the ADA t chart on the white board
Maddie
Give 3 examples of intangible assets and explain the difference between a tangible asset and an intangible asset
Trademarks, licensing rights, franchises, copyrights, patents, goodwill
Give the differentiation between an accounts receivable and a notes receivable
Notes receivable is a formal, written contract that includes the amount owed by the company, a maturity date, and interest. Accounts receivable just arises from sales of goods or services on credit
What is the effect on the accounting equation when a bad debt is recorded?
Assets -, Expenses +, NI -, SE -
What are the journal entries to record a customer that pays on an account that was already written off?
Reverse the WO (Dr. A/R, Cr. ADA) and then record the receipt of cash (Dr. Cash, Cr. A/R)
We ________ fixed assets
depreciate
How do we record bad debt expense? We _______ the amount of accounts that will ultimately be uncollectible and ______ against revenues in the period the sale is made
Estimate; match
What is the journal entry to write off a bad debt?
Dr. ADA
Cr. A/R
What equation do we use to compute interest on a note receivable?
P x R x T
We _______ intangible assets
amortize
What are net receivables? (ie what is the equation to get net receivables)
Gross A/R - ADA = net A/R
What is the effect on the accounting equation of a write off of a bad debt?
NO effect on ANY financial statement components
What is the equation for book value?
Acquisition costs - Accumulated depreciation
What form of tangible assets are NOT depreciated?
Land