1. Accounting for Uncollectible Accounts Receivable

2. 2 Uncollectible accounts Accounts receivable that cannot be collected Prior to selling on account businesses perform a thorough credit check ( past performance is the best indicator of future performance ) Calculated using previous experience and analysis Calculating the estimate of uncollectible accounts (expense) during the same fiscal year revenue is earned meets the accounting concept of matching expenses with revenue Does not affect Accounts Receivable balance, only the book value

3. 3LESSON 17-1 ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS EXPENSE page 515 Estimated Uncollectible Accounts Expense =Percentage× Total Sales on Account $12,873.30=1.0%×$1,287,330.00

4. 4LESSON 17-1 ANALYZING AND JOURNALIZING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE 1 2 page 516 33 1.Enter and label credit amount. 2.Enter and label debit amount. 3.Record adjusting entry.

5. 5 Writing off and collecting uncollectible accounts receivable Writing off an account – canceling the balance of a customer account because the customer does not pay

6. 6LESSON 17-2 JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 1 page 519 January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1,621.00. Memorandum No. 3. 1.Debit 2.Credit and customer’s name 22

7. 7LESSON 17-2 2.Post the credit amount to general ledger. POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 4 page 520 1 2 3 1.Post the debit amount to general ledger. 3.Post the credit amount to customer account. 4.Write Written off in the customer account.

8. 8LESSON 17-2 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, $1,621.00. Memorandum No. 5 and Receipt No. 12. 2.Enter a credit to Allowance for Uncollectible Accounts. 1 1

9. 9LESSON 17-2 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, $1,621.00. Memorandum No. 5 and Receipt No. 12.

10. 10LESSON 17-2 3.Write the words Reopen account in the Item column of the customer account. POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLE page 523 3 2 1 1 4 1.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.