CHAPTER 17 Uncollectible Accounts. 2 ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS EXPENSE page 515 Estimated Uncollectible Accounts Expense =Percentage×

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Presentation transcript:

CHAPTER 17 Uncollectible Accounts

2 ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS EXPENSE page 515 Estimated Uncollectible Accounts Expense =Percentage× Total Sales on Account $12,873.30=1.0%×$1,287, When you sell on account you take the risk that a customer will not pay. Uncollectible Accounts - Accounts receivable that cannot be collected. This risk is a cost of doing business that should be recorded as an in the same accounting period the revenue is earned. We cannot predict which exact accounts will be uncollectible - if so, we could credit each accounts receivable account. So we estimate. Estimating accomplishes two objectives:

3 ANALYZING AND JOURNALIZING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE 1 2 page Enter and label credit amount. 2.Enter and label debit amount. 3.Record adjusting entry.

4 POSTING AN ADJUSTING ENTRY FOR UNCOLLECTIBLE ACCOUNTS EXPENSE page Debit 2.Credit

LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable

6 JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 1 page 519 January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1, Memorandum No Debit 2.Credit and customer’s name 22

7 2.Post the credit amount to general ledger. POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 4 page Post the debit amount to general ledger. 3.Post the credit amount to customer account. 4.Write Written off in the customer account.

8 REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF 1.Enter a debit to Accounts Receivable. Place a diagonal line in the Post. Ref. column. 2 page 521 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1, Memorandum No. 5 and Receipt No Enter a credit to Allowance for Uncollectible Accounts. 1 1

9 RECORDING CASH RECEIVED FOR AN ACCOUNT PREVIOUSLY WRITTEN OFF page 522 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1, Memorandum No. 5 and Receipt No. 12.

10 3.Write the words Reopen account in the Item column of the customer account. POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLE page Post the general journal entry to the general ledger. 2.Post the debit portion of the general journal entry to the customer account. 4.Post the cash receipts journal entry to the customer account.