Accounting for Uncollectible Accounts Receivable Chapter 20.

Slides:



Advertisements
Similar presentations
Allowance for Uncollectible Accounts
Advertisements

LESSON 11-1 Posting to an Accounts Payable Ledger
Posting to General and Subsidiary Ledgers
Accounting for Uncollectible Accounts Receivables
Learning Targets Chapter 10
Accounts Receivable and Uncollectible Accounts
LESSON /17/2017 CHAPTER 14 Benchmark 4 The accounting cycle forms the basis for all accounting practices DISTRIBUTING DIVIDENDS AND PREPARING A.
Chapter 10 Accounting Theory.
RECEIVABLES & SALES CHAPTER FIVE.
BAD DEBTS Chapter 8 p Bad Debts = a term used to describe amounts that cannot be collected The reporting of bad debts is governed by the matching.
Accounting 3 Chapter 23 Section 3.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-1 Buying Plant Assets and Paying Property Tax.
LESSON /20/2017 CHAPTER 14 Distributing Dividends and Preparing a Work Sheet for a Merchandising Business.
Distributing Dividends and Preparing a Worksheet for a Merchandising Business.
Accounting 3 Chapter 20 Section 1. Uncollectible Accounts Even though companies do thorough credit checks on their customers, it is inevitable that some.
Questions that you need to ask yourself. Have you understood everything up to this point?Have you understood everything up to this point? Can you tell.
Chapter 9 Accounting for Notes Payable, Prepaid Expenses an Accrued Expenses.
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable Original created by M.C. McLaughlin,
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-3 & 11-4 Posting from Journals to a General Ledger.
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 11-2 Posting to an Accounts Receivable Ledger.
© 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO4 Write off an uncollectible account.
Chapter 9 Journalizing Purchases and Cash Payments.
Please do not forget News articles are due by the end of this week…… News articles are due by the end of this week…… Must have 6 of them, not from the.
CHAPTER 8 RECEIVABLES. Learning Objective 1 Describe the common classes of receivables.
Accounting 3 Chapter 20 Section 2. Journalizing Writing Off an Uncollectible Account Receivable When a customer account is determined to be uncollectible,
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 7-2 Allowance Method of Recording Uncollectible Accounts Expense Allowance method of.
Chapter 20 Accounting for Uncollectible Accounts Receivable.
1 Chapter 8. 2 Receivables - amounts owed to company by others. Accounts Receivable –Company just bills its customers/clients –Result from rendering services.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-3 Posting from Journals to a General Ledger Slides are on class website.
Accounting 3 Chapter 24 Section 1 Accounting for Accrued Revenue and Expenses.
Accounting for Uncollectible Accounts Receivable.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable.
Chapter 19 Recording Sales and Cash Receipts. Lets take a look If you would look at the three journals –Sales No Change from what we have done in the.
Chapter 10 Sales and Cash Receipts journal. Terms you need to know Customer – a person or business to who merchandise or services are sold. Customer –
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-1 Uncollectible Accounts.
CHAPTER 17 Uncollectible Accounts. 2 ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS EXPENSE page 515 Estimated Uncollectible Accounts Expense =Percentage×
LESSON 11-1 Posting to an Accounts Payable Ledger
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable.
Chapter 12 Posting to General and Subsidiary Ledgers.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-1 Posting to an Accounts Payable Ledger.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable.
LESSON 11-2 Posting to an Accounts Receivable Ledger.
Chapter 10 Accounting for Notes Receivable, Unearned Revenue, and Accrued Revenue.
© 2014 Cengage Learning. All Rights Reserved.
© 2014 Cengage Learning. All Rights Reserved.
LESSON /14/2018 LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment.
Allowance Method of Recording Uncollectible Accounts Expense
LESSON /14/2018 LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment.
Allowance Method of Recording Uncollectible Accounts Expense
LESSON 17-1 Uncollectible Accounts
Distributing Dividends & Preparing Work Sheet
LESSON 17-1 Uncollectible Accounts
Posting Special Journal Totals to a General Ledger
Accounts receivable Chapter 16.
Accounting for Uncollectible Accounts
Allowance Method of Recording Uncollectible Accounts Expense
JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE
LESSON 7-1 Direct Write-Off Method of Recording Uncollectible Accounts
ALLOWANCE METHOD OF RECORDING LOSSES FROM UNCOLLECTIBLE ACCOUNTS
Posting Special Journal Totals to a General Ledger
Posting Special Journal Totals to a General Ledger
LESSON /7/2019 LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment.
LESSON 7-1 Direct Write-Off Method of Recording Uncollectible Accounts
LESSON 17-1 Uncollectible Accounts
© 2014 Cengage Learning. All Rights Reserved.
LO4 Write off an uncollectible account receivable.
LESSON 7-1 Direct Write-Off Method of Recording Uncollectible Accounts
LESSON /24/2019 LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment.
Presentation transcript:

Accounting for Uncollectible Accounts Receivable Chapter 20

Uncollectible Account What is it? What is it? An account that has defaulted (not paid) on what is owed to you… An account that has defaulted (not paid) on what is owed to you… What do you do? What do you do? 1. Either keep it on your books and hope that it is paid 2. Close the account out 1. Usually then we turn it over to a collection agency

Terms that you need to know. Accounts Receivable Accounts Receivable That account that we have used all year long when someone buys something from us on account. That account that we have used all year long when someone buys something from us on account. Allowance for Uncollectible Accounts Allowance for Uncollectible Accounts Contra account for Accounts Receivable Contra account for Accounts Receivable The balance in this account reduces the amount of accounts receivable The balance in this account reduces the amount of accounts receivable We agree that there will be a certain amount of accounts that will not be paid. We agree that there will be a certain amount of accounts that will not be paid.

Allowance method of recording losses from uncollectible accounts Allowance method of recording losses from uncollectible accounts When we use the allowance for uncollectible accounts account When we use the allowance for uncollectible accounts account Book Value Book Value The difference between an asset’s account balance and its related contra account balance is its book value. The difference between an asset’s account balance and its related contra account balance is its book value. Car example Car example More terms that you need to know.

Book value of accounts receivable Book value of accounts receivable The difference between accounts receivable and its contra account The difference between accounts receivable and its contra account Estimating uncollectible accounts expense Estimating uncollectible accounts expense Doesn't it make sense that we assume a portion of our accounts receivable will be uncollected? Doesn't it make sense that we assume a portion of our accounts receivable will be uncollected? So we estimate a number, that a portion of our sales on account will be uncollectible. We get that percentage either from prior years or what the industry average is….. So we estimate a number, that a portion of our sales on account will be uncollectible. We get that percentage either from prior years or what the industry average is…..

Total Sales on Account X Percentage = Estimated Uncollectible Accounts Expense x1% We assume that additional will not be collected. We would add that to the actual amount that has not been collected and that would give us our total of uncollectible. The 9828 is an adjustment that goes on the worksheet adjustment column, and is journalized and posted just like the other adjustments.

Please work on On Your Own on page 532 Please work on On Your Own on page 532

Writing off and collecting accounts receivable. Once we determine that an account will not be collected. We need to write that account off. Once we determine that an account will not be collected. We need to write that account off. Here is how you need to think of it. When we first put the sale on our books we increased our Accounts Receivable, and increased our sales. Here is how you need to think of it. When we first put the sale on our books we increased our Accounts Receivable, and increased our sales. Now that it is uncollectible we need to decrease our Accounts receivable by writing it off, and using the contra account Allowance for Uncollectible accounts to decrease our sales account. This is called writing off the account. Now that it is uncollectible we need to decrease our Accounts receivable by writing it off, and using the contra account Allowance for Uncollectible accounts to decrease our sales account. This is called writing off the account.

General JournalPage 1 Date Account TitleDoc NoPost RefDebitCredit Dec3Allow. For Uncollectible AccountsM2 462 Accts. Rec./ Ryan Recreation 462 December 3 Wrote off Ryan Recreation’s past due account as uncollectible, $ Memorandum No. 2 Remember that we must post these in the appropriate General ledger accounts As well…. Please look at page 534 in textbook

What happens if we receive money from an account that was previously written off? January 29. Received cash in full payment of Ryan Recreation’s account, previously written off as uncollectible. $ Memorandum No. 3 and Receipt No. 8. Cash Receipts Journal DateAccount TitleDoc Post Ref General A/R Credit Sales Credit Sales Tax Payable Sales Discou nt Debit Cash Debit CreditDebitCredit Jan 2929 Ryan RecreationalR8 462 Step one: Record the cash that we received from the payment of the Accounts Rec.

Step two: is to fix the Account Receivable and put it back on the books as a receivable instead of a uncollectible. So we have to write it out of the uncollectible accounts account, and put it back onto the accounts receivable. General Journal DateAccount TitleDoc NoPost RefDebitCredit Jan29Accts/ Receivable/ Ryan RecreationM3 462 Allowance for Uncollectible Accts 462

Here is the work!!!!!! Problems 20-1,2,3 Problems 20-1,2,3 Computer Problem 20-4 Computer Problem 20-4