intermediateaccountingtherevenue47receivables47cashcycle-免費(fèi)閱讀
【正文】 the second to record receipt of the cash. Uncollectible Receivables (Allowance Method) 726 Accounts Receivable 1,500 Allowance for Bad Debts 1,500 Cash 1,500 Accounts Receivable 1,500 The first entry is to reverse the writeoff entry: The second entry is to record receipt of the cash: Uncollectible Receivables (Allowance Method) 727 728 Uncollectible Receivables (Allowance Method) ? Allowance for Bad Debts is a contraasset account that is subtracted from Accounts Receivable on the balance sheet. ? The actual writeoff entry for $1,500 does not reduce receivables, as shown below: Accts. receivable $300,000 Accts. receivable $298,500 Less: Allowance for Less: Allowance for bad debts 15,000 bad debts 13,500 Net receivables $285,000 Net receivables $285,000 729 Percentage of Sales When basing estimated uncollectibles on sales for the period, it is preferable to apply the percentage to credit sales. However, the percentage is frequently applied to total sales to avoid having to maintain separate records for cash and credit sales. 730 During 2020, a pany had credit sales of $100,000. The current accounts receivable balance is $30,500. The allowance for bad debts balance is $350. Historically, 2 percent of the credit sales are not collected. The following adjusting entry is made at the end of the fiscal period: Bad Debt Expense 2,000 Allowance for Bad Debts 2,000 To record estimated bad debt expense for the period ($100,000 ? = $2,000). Percentage of Credit Sales 731 Allowance for Bad Debts Balance 350 Adjusting 2,000 Dec. 31, Bal. 2,350 After the adjusting entry is posted, Allowance for Bad Debts will have a balance of $2,350. Percentage of Credit Sales 732 If total accounts receivable for Lamberson Company are $50,000 and it is estimated that 3% of those accounts will be uncollectible, the allowance account needs to have a balance of $1,500 ($50,000 ? ). If the allowance account already has a $600 credit balance, the currentperiod adjusting entry is as follows: Bad Debt Expense 900 Allowance for Bad Debts 900 To record estimated bad debt expense for the period ($1,500 required balance ? $600 current balance = $900 adjustment) Percentage of Accounts Receivable 733 ? The ending balance must be forced to achieve the desired balance. ? For instance, in the previous example if the allowance account had already had a debit balance of $200, the adjustment required would be for $1,700 to bring the allowance account to the desired ending balance of $15,00. Adjusting 1,700 Dec. 31, Bal. 1,500 Allowance for Bad Debts Balance 200 Percentage of Accounts Receivable 734 Aging Receivables ? The most monly used method for establishing an allowance based on outstanding receivables involves aging receivables. ? Individual accounts are analyzed to determining those not yet due and those past due. 735 (continues) 736 737 Aging Receivables The amount derived from aging, $2,870, is the desired balance of the allowance account after the adjusting entry. If Allowance for Bad Debts already has a credit balance of $620 before adjustment, the following entry is needed: Bad Debt Expense 2,250 Allowance for Bad Debts 2,250 To record estimated bad debt expense for the period ($2,870 required balance ? $620 current balance = $2,250 adjustment) 738 Corrections to Allowance for Bad Debts ? If the allowance provisions are too large or small, a correction in the allowance as well as a change in the rate or in the method employed will be needed (if the amount is material). ? The effect of this change in accounting estimate would be reported in the current and future periods as an ordinary item on the ine statement, usually as an addition or subtraction from Bad Debt Expense. 739 Warranties for Service or Replacement Many panies agree to provide free services on units failing to perform satisfactorily or to replace defective goods. These agreements are referred to as a warranties. 740 MJW Video amp。 Sound sells DVD players with a 2year warranty. Past experience indicates that 10% of all systems sold will need repairs in the first year, and 20% will need repairs in the second year. The average repair cost is $50 per system. Warranties for Service or Replacement 741 The number of systems sold in 2020 and 2020 was 5,000 and 6,000, respectively. Actual repair costs were $12,500 in 2020 and $55,000 i
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