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LESSON 14-4 5/24/2019 LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment
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Uncollected Debts With every sale made an account, a business takes a risk that their customers may not pay them The risk of uncollected accounts turns into an expense (Uncollectible Accounts Expense) LESSON 14-4
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Since it is impossible to accurately guess what percent of customers will not pay us, we have to estimate how many accounts will remain unpaid. LESSON 14-4
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ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE
page 420 Estimated Uncollectible Accounts Expense = Percentage × Total Sales on Account $124,500.00 × 1% = $1,245.00 LESSON 14-4
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ANALYZING AND RECORDING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE
page 421 3 1 2 1. Enter the estimated uncollectible amount. 2. Enter the same amount in the Adjustments Debit column. 3. Label the two parts with a small letter e in parentheses. LESSON 14-4
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14-4 Work Together 424,000 x .005 = $2,120 LESSON 14-4
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TERMS REVIEW uncollectible accounts
page 422 uncollectible accounts allowance method of recording losses from uncollectible accounts book value book value of accounts receivable LESSON 14-4
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