JEs
Under the allowance method, what is the adjusting journal entry to record estimated bad debts?
Answer:
Debit Bad Debt Expense
Credit Allowance for Doubtful Accounts
Which method focuses on matching expense to revenue?
Percentage of Credit Sales Method
Define Notes Receivable. How is it different from A/R
A formal written promise to receive a specific amount of money at a future date, usually with interest.
What accounts go on the income statemen? What accounts go on the balance sheet?
Rev, exp
ALOE
Bright Star Co. writes off a $900 customer account previously determined to be uncollectible. What is the journal entry?
Debit Allowance for Doubtful Accounts 900
Credit Accounts Receivable 900
Which method focuses on reporting Accounts Receivable at net realizable value?
Aging of Accounts Receivable
State the formula for simple interest.
I = P × R × T
Write the DEALER Acronym
DIVIDENDS
EXPENSES
ASSETS
LIABILITIES
EQUITY
REVENUE
A company previously wrote off $600. The customer unexpectedly pays in full. What are the TWO journal entries?
Reinstate:
Debit Accounts Receivable 600
Credit Allowance for Doubtful Accounts 600
Record collection:
Debit Cash 600
Credit Accounts Receivable 600
Ocean Supply has $800,000 in credit sales. Estimated uncollectible rate is 2%.
What is Bad Debt Expense?
Bad Debt Expense = 16,000
Harbor Co. lends $50,000 at 6% for 10 months.
How much interest will be earned?
50,000 × .06 × 10/12 = 2,500
Classify the following "
Accumulated Depreciation
Accumulated Amortization-Software
Allowance for Uncollectible Accounts
Deferred Revenue
Contra assets and a liability
Before adjustment, Allowance for Doubtful Accounts has a $1,200 debit balance. Aging indicates the desired ending balance should be $4,000 credit. What is the adjusting amount?
Answer:
Needed adjustment = 5,200
(Debit balance 1,200 + desired 4,000 credit)
Journal entry:
Debit Bad Debt Expense 5,200
Credit Allowance 5,200
An aging schedule estimates $25,000 uncollectible. The allowance account currently has a $7,000 credit balance.
What is the adjustment?
Debit Bad Debt Expense 18,000
Credit Allowance 18,000
On July 1, a company issues a 6-month 8% note for $20,000.
What adjusting entry is needed on December 31?
Debit Interest Receivable 800
Credit Interest Revenue 800
Using the previous answer (7.5 turnover), calculate Days to Collect.
365 ÷ 7.5 = 48.7 days
True or False: Writing off an account under the allowance method decreases total assets.
Answer: False
(Net A/R stays the same.)
Explain why the allowance account might have a debit balance before adjustment.
More accounts were written off than previously estimated.
List the THREE/ FOUR key dates/ events when journal entries are required for notes receivable.
Issuance date
Year-end adjusting entry
Maturity (interest)
Collection of principal
Net credit sales = 900,000
Beginning A/R = 100,000
Ending A/R = 140,000
Calculate receivables turnover.
Average A/R = 120,000
Turnover = 900,000 ÷ 120,000 = 7.5 times