Cruel Summer (Credit Risks)
The primary reason businesses willingly accept the risk of selling on credit instead of demanding cash upfront.
What is to increase total sales volume?
This accounting method removes an uncollectible balance from the records only after management determines that a specific customer definitely won't pay.
What is the Direct Write-Off Method?
Before you can legally touch or record a surprise check from a customer you previously wrote off, you must perform this mandatory step to fix their records.
What is reinstating the account?
After an account is successfully reinstated, the final entry to record the physical cash moving into the business belongs in this specialized journal.
What is the Cash Receipts Journal?
This classic summer camp treat consists of a roasted marshmallow and a layer of chocolate sandwiched between two graham crackers.
Smores
The official accounting term for a customer's account receivable balance that a business determines will never be collected.
What is an uncollectible account (or bad debt)?
When writing off a bad debt under this method, this specific expense account is always debited.
What is Uncollectible Accounts Expense?
To reverse a previous write-off and pull the customer's asset record back out of the recycling bin, you must apply a debit to this controlling account.
What is Accounts Receivable?
The highly desirable asset account that is debited when a resurrected customer finally hands over their cash or check.
What is Cash in Bank?
This popular pink-fleshed summer fruit is botanically classified as a giant berry.
What is a watermelon?
The national business credit-rating organization a wholesaler or manufacturer would check before shipping thousands of dollars of goods to a retail store on account.
What is Dun & Bradstreet?
To eliminate a customer's unpaid balance from your active books, you must apply this type of accounting entry (debit or credit) to Accounts Receivable.
What is a credit?
When reinstating an account, this account is credited to cancel out the bad debt expense you recorded earlier in the year.
What is Uncollectible Accounts Expense?
After an accountant completes both the reinstatement entry and the final cash receipt entry, the customer's current account receivable balance will sit at this exact number.
What is $0.00?
In the Northern Hemisphere, the summer solstice—the longest day of the year—always falls during this calendar month.
June
Name two of the three major consumer credit bureaus you would use to look up an individual's credit score before approving their store application.
What are Equifax, Experian, or TransUnion? (Any two)
Corporate accountants must master the direct write-off method because it is the only method allowed by law for this specific annual government filing.
What are Federal Income Tax purposes?
True or False: If a customer hands you exact cash to settle an account that was written off yesterday, you can skip the reinstatement entry to save time.
What is False? (Skipping it breaks the ledger history)
Even though a recovered customer's balance returns to $0.00, their subsidiary ledger maintains a permanent record of this specific column, warning future managers that they were once written off.
What is the Description (or Explanation) column?
This classic 1975 Steven Spielberg thriller invented the concept of the Hollywood "summer blockbuster."
JAWS
The word used to describe a potential or expected customer.
What is prospective?
The source document prepared by management that officially authorizes an accountant to write off a customer's account.
What is a memorandum?
If Kyle Vance’s account was originally written off for a total of $800, this is the exact dollar amount his account must be debited during the reinstatement entry.
What is $800.00?
If a customer’s original bill was $300 plus $18 sales tax, this is the total amount of cash required to fully reinstate and clear their account.
What is $318.00? (The write-off and collection must include the total balance, including sales tax).
When buying sunscreen to protect your skin at the beach, the bottle will always list an "SPF" number. SPF stands for this three-word phrase.
What is Sun Protection Factor?