Random
The two methods of accounting for bad debts
Direct Write-Off
Allowance
How many days are used in one year when computing Interest? (Banker's Rule)
360
Recording Credit Sales
DR: Accounts Receivable
CR: Sales
Free 100 pts.
:D
Principal amount * Annual Interest Rate * Time Expressed in fraction of year = ________.
Interest
What are the two methods of ESTIMATING bad debts?
Balance Sheet
How does Bad Debt Expense affect total assets
Decreases them
DR: Bad Debts Expense
CR: Allowance for Doubtful Accounts
Accrued Interest Earned
DR: Interest Receivable
CR: Interest Revenue
Net Sales / Average Accounts Receivable
Accounts Receivable Turnover
Expenses are reported in the same accounting period as the sales they helped produce.
An amount due from another party...
Receivable
Writing off an Uncollectable Account
DR: Bad Debts Expense
CR: Accounts Receivable (Direct Write-Off Method)
OR
DR: Allowance for Doubtful Accounts
CR: Accounts Receivable (Allowance method)
Receiving a note in settlement of account receivable
DR: Note Receivable
CR: Accounts Receivable
Current Period Sales * Bad Debt% = __________. (Percent of Sales method)
Estimated Bad Debt Expense
A written promise to pay a specified amount of money, including interest, at a stated future date.
The Direct Write-Off method does not follow the rules of which Accounting accounting standard?
GAAP
Recording Credit Card Sale Less the Credit Card Expense
DR: Cash
DR: Credit Card Expense
CR: Sales
Selling Goods in exchange for note
DR: Notes Receivable
CR: Sales
(Accounts Receivable / Net Sales) * 365 = _________.
Days to Collect
The Day the Note (principal and interest amount) must be paid.
Maturity Date
What kind of account is the allowance for doubtful accounts?
Contra-Asset
Reinstating an account that was previously written off
DR: Accounts Receivable
CR: Allowance for Doubtful Accounts
Received payment of the note INCLUDING interest and accrued interest.
CR: Interest Revenue
CR: Interest Receivable
CR: Notes Receivable
Total Estimated Bad Debt Expense - Previous Balance in Allowance Account = ____________.
Current Bad Debt Expense