The note was dated March 1, 2009 and was due May 30, 2009. This is 3 months or 3/12 of a year. The principal was $12,000 and the annual interest rate was 9%. To calculate the interest, use the formula:
Principal × Annual Interest Rate × Time Expressed in Years = Interest
So, $12,000 × 9% × 3/12 = $270
Therefore, the interest on the note is $270.
Bad debts and Provision for Bad debts. Bad Debts. When the firm finds that it is impossible to collect a debt, that debt should be written off as a bad debt.
Accounting Cycle- Accruals and Defferls- Adjusting entriesFaHaD .H. NooR
An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt. There are accruals for expenses and for revenues. There are deferrals for expenses and for revenues.
An accrual of an expense refers to the reporting of an expense and the related liability in the period in which they occur, and that period is prior to the period in which the payment is made. An example of an accrual for an expense is the electricity that is used in December, but the payment will not be made until January.
An accrual of revenues refers to the reporting of revenues and the related receivables in the period in which they are earned, and that period is prior to the period of the cash receipt. An example of the accrual of revenues is the interest earned in December on an investment in a government bond, but the interest will not be received until January.
A deferral of an expense refers to a payment that was made in one period, but will be reported as an expense in a later period. An example is the payment in December for the six-month insurance premium that will be reported as an expense in the months of January through June.
A deferral of revenues refers to receipts in one accounting period, but they will be earned in future accounting periods. For example, the insurance company has a cash receipt in December for a six-month insurance premium. However, the insurance company will report this as part of its revenues in January through June.
Bad debts and Provision for Bad debts. Bad Debts. When the firm finds that it is impossible to collect a debt, that debt should be written off as a bad debt.
Accounting Cycle- Accruals and Defferls- Adjusting entriesFaHaD .H. NooR
An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt. There are accruals for expenses and for revenues. There are deferrals for expenses and for revenues.
An accrual of an expense refers to the reporting of an expense and the related liability in the period in which they occur, and that period is prior to the period in which the payment is made. An example of an accrual for an expense is the electricity that is used in December, but the payment will not be made until January.
An accrual of revenues refers to the reporting of revenues and the related receivables in the period in which they are earned, and that period is prior to the period of the cash receipt. An example of the accrual of revenues is the interest earned in December on an investment in a government bond, but the interest will not be received until January.
A deferral of an expense refers to a payment that was made in one period, but will be reported as an expense in a later period. An example is the payment in December for the six-month insurance premium that will be reported as an expense in the months of January through June.
A deferral of revenues refers to receipts in one accounting period, but they will be earned in future accounting periods. For example, the insurance company has a cash receipt in December for a six-month insurance premium. However, the insurance company will report this as part of its revenues in January through June.
Accounting Cycle - Ledgers - Capturing accounting eventFaHaD .H. NooR
What is a general ledger account?
A general ledger account is an account or record used to sort and store balance sheet and income statement transactions. Examples of general ledger accounts include the asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment. Examples of the general ledger liability accounts include Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits. Examples of income statement accounts found in the general ledger include Sales, Service Fee Revenues, Salaries Expense, Rent Expense, Advertising Expense, Interest Expense, and Loss on Disposal of Assets.
Some general ledger accounts are summary records which are referred to as control accounts. The detail that supports each of the control accounts will be found outside of the general ledger in what is known as a subsidiary ledger. For example, Accounts Receivable could be a control account in the general ledger, and there will be a subsidiary ledger which contains each customer's credit activity. The general ledger accounts Inventory, Equipment, and Accounts Payable could also be control accounts and for each there will be a subsidiary ledger containing the supporting detail.
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
Debits and credits in accounting - History and definitionNowMaster Academy
This is the first set of slides in a series that looks at the underlying principles and application of the 'Debits and Credits' classification system for financial transactions in accounting.
In order to increase the sales, business houses are required to market their products over a larger territory and may generally split their business into certain divisions or parts, if the various certain divisions or parts, if the various parts or divisions are located in different parts of the same city as Chandni chowk, Karol bagh, Connaught place, Nehru place (in delhi) or in different cities of the same country as Calcutta, Chennai, Mumbai, Kanpur and Delhi (in india) or in different countries (in the world) as Canada, USA, England, Japan, U.S.S.R and Germany, these are known as branches, head office contracts the activities of various branches
Accounting Cycle - Ledgers - Capturing accounting eventFaHaD .H. NooR
What is a general ledger account?
A general ledger account is an account or record used to sort and store balance sheet and income statement transactions. Examples of general ledger accounts include the asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment. Examples of the general ledger liability accounts include Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits. Examples of income statement accounts found in the general ledger include Sales, Service Fee Revenues, Salaries Expense, Rent Expense, Advertising Expense, Interest Expense, and Loss on Disposal of Assets.
Some general ledger accounts are summary records which are referred to as control accounts. The detail that supports each of the control accounts will be found outside of the general ledger in what is known as a subsidiary ledger. For example, Accounts Receivable could be a control account in the general ledger, and there will be a subsidiary ledger which contains each customer's credit activity. The general ledger accounts Inventory, Equipment, and Accounts Payable could also be control accounts and for each there will be a subsidiary ledger containing the supporting detail.
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
Debits and credits in accounting - History and definitionNowMaster Academy
This is the first set of slides in a series that looks at the underlying principles and application of the 'Debits and Credits' classification system for financial transactions in accounting.
In order to increase the sales, business houses are required to market their products over a larger territory and may generally split their business into certain divisions or parts, if the various certain divisions or parts, if the various parts or divisions are located in different parts of the same city as Chandni chowk, Karol bagh, Connaught place, Nehru place (in delhi) or in different cities of the same country as Calcutta, Chennai, Mumbai, Kanpur and Delhi (in india) or in different countries (in the world) as Canada, USA, England, Japan, U.S.S.R and Germany, these are known as branches, head office contracts the activities of various branches
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ill in the dollar changes caused in the Investment account and Div.docxgordienaysmythe
ill
in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Crane Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Hudson Company.
(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.)
(a) Fair Value Method
(b) Equity Method
Transaction
Investment Account
Dividend Revenue
Investment Account
Investment Revenue
1.
At the beginning of Year 1, Crane bought 25% of Hudson's common stock at its book value. Total book value of all Hudson's common stock was $850,000 on this date.
2.
During Year 1, Hudson reported $54,000 of net income and paid $27,000 of dividends.
3.
During Year 2, Hudson reported $31,500 of net income and paid $20,000 of dividends.
4.
During Year 3, Hudson reported a net loss of $12,000 and paid $3,800 of dividends.
5.
Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
Exercise 122 (Part Level Submission)
The following information is available for Irwin Company for 2018:
Net Income
$119,000
Realized gain on sale of available-for-sale debt securities
10,000
Unrealized holding gain arising during the period on available-for-sale debt securities
30,000
Reclassification adjustment for gains included in net income
7,500
(a)
Determine other comprehensive income for 2018.
Other comprehensive income
$
Exercise 123
On January 2, 2018, Tylor Company issued a 4-year, $600,000 note at 8% fixed interest, interest payable semiannually. Tylor now wants to change the note to a variable rate note. As a result, on January 2, 2018, Tylor Company enters into an interest rate swap where it agrees to receive 8% fixed and pay LIBOR of 5.5% for the first 6 months on $600,000. At each 6-month period, the variable interest rate will be reset. The variable rate is reset to 6.6% on June 30, 2018.
Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2018.
Net interest expense
$
LINK TO TEXT
Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2018.
Net interest expense
$
Brief Exercise 17-2
Pina Company purchased, on January 1, 2017, as an available-for-sale security, $65,000 of the 8%, 5-year bonds of Chester Corporation for $60,072, which provides
an
10% return.
Prepare Pina’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $61,750.
(Round answers to 0 decimal places, e.g. 1,225..
Bad debt, in an accounting environment, represents revenue from sales that were purchased on credit and/or notes receivable that have proven uncollectible
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how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
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how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
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Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
when will pi network coin be available on crypto exchange.
Chapter 8
1. Chapter 8
Reporting and
Interpreting Receivables,
Bad Debt Expense, and
Interest Revenue
2. Learning Objectives
1. Describe the trade-offs of extending
credit.
2. Estimate and report the effects of
uncollectible accounts.
3. Compute and report interest on notes
receivable.
4. Compute and interpret the receivables turnover
ratio.
3. Sales on Account
When companies allow customers to purchase
merchandise on an open account, the customer
agrees to pay the company in the future
For sales on account, credit is extended without a
formal note for a short period (30 to 60 days)
Although cash is not received initially, if collection is
reasonably certain, sales revenue and an account
receivable are recorded at the time of the sale.
Advantages: Increases the seller’s revenues.
Disadvantages:
Increased wage costs.
Bad debt costs.
Delayed receipt of cash.
4. Accounting for Bad Debts
Bad debts result from credit customers
who will not pay the business the amount
they owe, regardless of collection efforts.
5. Accounting for Bad Debts
Bad debts are likely to be discovered in
periods after the credit sale.
If bad debts are not reported until discovered,
income is distorted in the periods of sale as
well as in the period of bad debt discovery.
Year 1 Year 2
(Credit Sale Occurs) (Bad Debt discovered)
Revenues $ 10,000 Revenues 0
Cost of goods sold 6,000 Cost of goods sold 0
Bad debt expense 0 Bad debt expense 1,000
Net income $ 4,000 Net income $ (1,000)
Can you find any problem in this example?
6. Accounting for Bad Debts
Bad Debt
Expense
Matching Record in same
Principle accounting period.
Sales Revenue
Accounts receivable should be carried at
net realizable value
7. Allowance Method for
Uncollectible Accounts
Allowance method follows a two-step
process:
1. It records an estimated bad debt expense
in the period when the related sales take
place, by making an adjusting journal entry
at the end of that period.
2. It removes (write off) accounts receivable
in the period they are determined to be
uncollectible.
8. Accounting for Bad Debts
Revision of the example using Allowance Method: in Year
1, suppose the firm estimated and recorded a bad debt
expense $1,000.
Year 1 Year 2
(Credit Sale Occurs) (Bad Debt discovered)
Revenues $ 10,000 Revenues 0
Cost of goods sold 6,000 Cost of goods sold 0
Bad debt expense 1,000 Bad debt expense -
Net income $ 3,000 Net income $ -
9. Recording Bad Debt Expense
Estimates
Timberland estimated bad debt expense for
2009 to be $2,000,000.
Prepare the adjusting entry.
GENERAL JOURNAL Page 78
Date Description Debit Credit
Dec. 31
10. Recording Bad Debt Expense
Estimates
Timberland estimated bad debt expense for
2009 to be $2,000,000.
Prepare the adjusting entry.
Bad Debt Expense is normally classified as aPage 78
GENERAL JOURNAL
Date selling expense and is closed at year-end. Credit
Description Debit
Dec. 31 Bad Debt Expense (+E, -SE) 2,000,000
Allowance for Doubtful Accounts(-A) 2,000,000
Contra asset account
11. Allowance for Doubtful Accounts
Balance Sheet Disclosure
Accounts receivable 67,000,000
Less: Allowance for doubtful accounts (2,000,000)
Net realizable value of accounts receivable 65,000,000
Amount the business
expects to collect.
12. Writing Off Uncollectible Accounts
When it is clear that a specific
customer’s account receivable will be
uncollectible, the amount should be
removed from the Accounts Receivable
account and charged to the Allowance for
Doubtful Accounts.
13. Writing Off Uncollectible Accounts
Timberland’s total write-offs for
2009 were $1,480,000.
Prepare a summary journal
entry for these write-offs.
GENERAL JOURNAL Page 37
Date Description Debit Credit
14. Writing Off Uncollectible Accounts
Timberland’s total write-offs for
2009 were $1,480,000.
Prepare a summary journal
entry for these write-offs.
GENERAL JOURNAL Page 37
Date Description Debit Credit
Allowance for Doubtful Accounts(+A) 1,480,000
Accounts Receivable(-A) 1,480,000
15. Writing Off Uncollectible Accounts
Assume that before the write-
off, Timberland’s Accounts Receivable
balance was $81,000,000 and the
Allowance for Doubtful Accounts
balance was $2,000,000.
Let’s see what effect the total write-offs
of $1,480,000 had on these accounts.
16. Writing Off Uncollectible Accounts
Before Write- After Write-
Off Off
Accounts receivable $ 81,000,000 $ 79,520,000
Less: Allow. for doubtful accts. (2,000,000) (520,000)
Net realizable value $ 79,000,000 $ 79,000,000
Notice that the total write-offs of $1,480,000 did not
change the net realizable value nor did it affect any
income statement accounts.
17. Write-off of Uncollectible Accounts
Write-off of A/R deemed uncollectible
DOES NOT create an expense.
Write-offs decrease A/R and the Allowance
for Doubtful Accounts by like
amounts, therefore it DOES NOT affect the
net receivable balance.
There is no net effect on the total assets
18. Allowance Method Recap
The ADA is a contra-asset that is subtracted
from accounts receivable
It is “fed” with bad debt expense
It is “eaten up” by account write-offs
Allowance for
doubtful accounts
Bad debt Write-
expense offs
19. Summary of allowance method
Step Timing Accounts F/S effects
1.Record End of Bad debts E Net Income
estimated period in
bad debts which sales ADA Assets
adjustment are made
2. Identify Throughout Accounts R Net income (N)
And write period as
off actual bad debts ADA Assets (N)
bad debts become known
20. Methods for Estimating Bad Debts
Income Statement Approach
Percent of Credit Sales
Balance Sheet Approach
Aging of Accounts Receivable
????
21. Percentage of Credit Sales
Bad debt percentage is based
on actual uncollectible accounts
from prior years’ credit sales.
Focus is on determining the amount to
record on the income statement as
Bad Debt Expense.
22. Percentage of Credit Sales
Net Credit Sales
% Estimated Uncollectible
Amount of Journal Entry
23. Percentage of Credit Sales
In 2009, Kid’s Clothes had credit sales of
$60,000. Past experience indicates that
bad debts are one percent of credit
sales.
What is the estimate of bad debts
expense for 2009?
24. Percentage of Credit Sales
In 2009, Kid’s Clothes had credit sales of
$60,000. Past experience indicates that
bad debts are one percent of credit
sales.
What is the estimate of bad debts
expense for 2009?
$60,000 × .01 = $600
Now, prepare the adjusting entry.
25. Percentage of Credit Sales
GENERAL JOURNAL Page 76
Date Description Debit Credit
Dec. 31 Bad Debt Expense 600
Allowance for Doubtful Accounts 600
26. Methods for Estimating Bad Debts
% of Sale method
Net Credit Sales
% Estimated Uncollectible
Amount of Journal Entry
Bad debt expense XXX
Allowance for doubtful accounts XXX
Allowance for doubtful accounts
Existing Balance
Aging of A/R method XXX adjustm ent
Accounts Receivable *
% estimated uncollectible End. Balance
Desired balance in ADA
27. Balance Sheet Approach
1. Determine the amount of A/R that are expected
to be uncollectible
2. This is equal to the required ADA balance
3. If existing ADA balance is not high enough then
increase the balance by recognizing bad debt
expense
Hint: Use of t-accounts is
very helpful here!
Allowance for doubtful accounts
Existing Balance
Aging of A/R method
XXX adjustm ent
Accounts Receivable *
% estimated uncollectible
End. Balance
Desired balance in ADA
28. Aging Schedule
Each customer’s account is aged by
breaking down the balance by
showing the age (in number of days)
of each part of the balance.
An aging of accounts receivable for
Kid’s Clothes in 2009 might look like
this . . .
29. Aging Schedule
Days Past Due
Total
Not Yet A/R
Customer Due 1-30 31-60 61-90 Over 90 Balance
Aaron, R. $ 235 $ 235
Baxter, T. $ 1,200 300 1,500
Clark, J. $ 50 $ 200 $ 500 750
Zak, R. 325 325
Total $ 3,500 $ 2,550 $ 1,830 $ 1,540 $ 1,240 $10,660
Based on past experience, the business
estimates the percentage of uncollectible
accounts in each time category.
30. Aging Schedule
Days Past Due
Total
Not Yet A/R
Customer Due 1-30 31-60 61-90 Over 90 Balance
Aaron, R. $ 235 $ 235
Baxter, T. $ 1,200 300 1,500
Clark, J. $ 50 $ 200 $ 500 750
Zak, R. 325 325
Total $ 3,500 $ 2,550 $ 1,830 $ 1,540 $ 1,240 $10,660
% Uncollectible 0.01 0.04 0.10 0.25 0.40
These percentages are then multiplied
by the appropriate column totals.
31. Aging of Accounts Receivable
Days Past Due
Record the Dec. 31, 2009, adjusting Total
entry assuming that the Allowance A/R
Not Yet
Customer Due 1-30 31-60 61-90 Over 90 Balance
Aaron, R. for Doubtful Accounts currently has $ 235
$ 235 a
Baxter, T. $50 300
$ 1,200 credit balance. 1,500
Clark, J. $ 50 $ 200 $ 500 750
Zak, R. 325 325
Total $ 3,500 $ 2,550 $ 1,830 $ 1,540 $ 1,240 $10,660
% Uncollectible 0.01 0.04 0.10 0.25 0.40
Estimated
Uncoll. Amount $ 35 $ 102 $ 183 $ 385 $ 496 $ 1,201
32. Aging of Accounts Receivable
Allowance for
Kids clothes’ balance in the Doubtful Accounts
allowance account is credit $50. 50
1,151
We estimated the proper 1,201
balance to be $1,201.
GENERAL JOURNAL Page 76
Post.
Date Description Ref. Debit Credit
Dec. 31 Bad Debt Expense 1,151
Allowance for Doubtful Accounts 1,151
33. Aging of Accounts Receivable
What if the existing balance of ADA is debit??
Allowance for Doubtful Accounts
50 Balance at
12/31/2003
before adj.
1,251 2003 adjustment
1,201 Balance at
12/31/2003
after adj.
34. Aging of Accounts Receivable
Accounts Receivable
% Estimated Uncollectible
Desired Balance in Allowance Account
- Allowance Account Credit Balance
Amount of Journal Entry
Accounts Receivable
% Estimated Uncollectible
Desired Balance in Allowance Account
+ Allowance Account Debit Balance
Amount of Journal Entry
35. Summary of Methods to Estimate Bad Debts
Income
Balance Sheet
Statement
Approach
Approach
Emphasis on Emphasis on Net
Matching Realizable Value
Sales Accts.
Bad Rec. All. for
Debts Uncoll.
Exp. Accts.
Income
Balance Sheet
Statement
Focus
Focus
36. Recovery of a Bad Debt
Subsequent collections on accounts written
off require that the original write-off entry be
reversed before the cash collection is
recorded.
DR CR
Feb. 8 Accounts Receivable - Martin 300
Allowance for Doubtful Accounts 300
To reinstate account previously written off
Feb. 8 Cash 300
Accounts Receivable - Martin 300
To record full payment on account
37. Notes Receivable
Accounts receivable do not
charge interest until they
become overdue, but notes
A note is a receivable start charging
written interest the day they are created.
promise to
pay a
specific
amount at a
specific
future date.
38. Notes Receivable
Term
$1,000.00 July 10, 2007
Payee
Ninety days after date I promise to pay to
the order of Barton Company, Los Angeles, CA
One thousand and no/100 --------------------------------- Dollars
Payable at First National Bank of Los Angeles, CA
Maker
Value received with interest at 12% per annum
No. 42 Due Oct. 8, 2007 Julia Browne
39. Notes Receivable
$1,000.00 July 10, 2007
Ninety days after date I promise to pay to
thePrincipal Barton Company, Los Angeles, CA
order of
One thousand and no/100 --------------------------------- Dollars
Payable at First National Bank of Los Angeles, CA
Interest Rate
Value received with interest at 12% per annum
No. 42 Due Oct. 8, 2007 Julia Browne
Due Date
40. Interest Computation
Interest is the compensation to the
lender for giving up the use of money
for a period of time.
To the lender, interest is a revenue.
To the borrower, interest is an expense.
41. Interest (less than one year)
Computation
Principal Annual Time
of the × interest × expressed = Interest
note rate in years
Even for Number of
maturities less months out of
than one year, twelve
the rate is that interest
annualized. period covers.
42. Computing Maturity and Interest
On March
1, 2009, Matrix, Inc.
purchased a copier for
$12,000 from Office
Supplies, Inc. Matrix
gave Office Supplies a
9% note due on May
30, 2009 in payment
for the copier.
43. Computing Maturity and Interest
Principal Annual Time
of the × interest × expressed = Interest
note rate in years
$ 12,000 × 9% × 3/12 = $ 270
Total interest due
at May 30.
44. Recognizing Notes Receivable
Here are the entries to record the note on
March 1, and the settlement on May 30, 2009.
DR CR
Mar. 1 Notes Receivable 12,000
Sales 12,000
Sold goods in exchange for note
DR CR
May 30 Cash 12,270
Interest Revenue 270
Notes Receivable 12,000
Collected note and interest due
45. Recording End-of-Period Interest
Adjustments
When a note
receivable is
outstanding at the
end of an accounting
period, the company
must prepare an
adjusting entry to
accrue interest
income.
46. Reporting Interest on
Notes Receivable
On November 1, 2007, Skechers loaned $100,000
cash and accepted a $100,000 one-year, 12
percent note. Skechers will receive the principal
and all interest earned on October 31, 2008.
Record Record interest
note Accrue and principal
receivable interest received
2007 Interest 2008 Interest
11/01/07 12/31/07 10/31/08
47. Recording Notes Receivable on Nov. 1
On November 1, 2007, Skechers loaned $100,000
cash and accepted a $100,000 one-year, 12
percent note. Skechers will receive the principal
and all interest earned on October 31, 2008.
On November 1, to record the note:
Accounts Debit Credit
Note Receivable (+A) 100,000
Cash (-A) 100,000
48. Accruing Interest Earned at fiscal year
end (12/31/2007)
$ 100,000 12% 2/ = $ 2,000
× × 12
On December 31, to accrue $ 2,000 interest receivable:
Accounts Debit Credit
Interest Receivable (+A) 2,000
Interest Revenue (+R, +SE) 2,000
49. Recording Interest Received and Principal at
Oct 31, 2008
On October 31, to record $112,000 cash received:
$100,000 principal (note receivable)
$2,000 interest receivable (2007 interest revenue)
$100,000 x 12% x 10/12 = $10,000 (2008 interest revenue)
Accounts Debit Credit
Cash (+A) 112,000
Interest Revenue (+R, +SE) 10,000
Interest Receivable (-A) 2,000
Note receivable (-A) 100,000
50. Quick check
On July 1, Barton Co. received a $1,000, 3
months, 10% note in exchange for merchandise sold to
a customer (the merchandise cost was $600).
Perpetual inventory system.
Notes receivable $1,000
Sales revenue $1,000
Cost of Goods sold $600
Inventory $600
On Sep 30, the customer paid interest and principal on
the note. $1,000 × 10% × 3/12 = $25
Cash $1,025
Interest revenue $25
Notes receivable $1,000
51. On Nov 1, received $2,000 cash plus a one
year, 12 %, $10,000 note from another customer
in exchange for merchandise (its cost was
$8,000).
Cash $2,000
Notes receivable $10,000
Sales revenue $12,000
Cost of Goods sold $8,000
Inventory $8,000
On Dec 31, prepare the adjusting entry for the
above note $10,000 × 12% × 2/12 = $200
Interest receivable $200
Interest revenue $200
On Oct 31 of the next year, received interest and
principal on the note.
Cash $11,200
Interest revenue $1,000
Interest receivable $200
Notes receivable $10,000
52. Accounts Receivable Turnover
Accounts Net Sales
Receivable = Average Net Accounts Receivables
Turnover
This ratio measures how many times average
receivables are recorded and collected for the year.
53. Accounts Receivable Turnover
Receivable Net Sales
Turnover = Average Net Accounts Receivables
Receivable $1,091,478,000
=
Turnover ($105,727,000 + $78,696,000) ÷ 2
= 11.8 times
Timberland reported 2008 net sales of $1,091,478,000.
December 31, 2007, net receivables were $78,696,000 and
December 31, 2008, net receivables were $105,727,000.
54. In-class problem #1
At the start of 2009, Accounts receivable showed a
$35,000 debit balance, and the Allowance for doubtful
accounts showed an $1,000 credit balance. During the
year of 2009, the firm had sales revenue of
$200,000, of which $100,000 was on credit.
Collections of accounts receivable during 2009
amounted to $88,000.
(a) On April 5, 2009, a customer balance of $1,500 from a
prior year was determined to be uncollectible, so it
was written off.
(b) On December 31, 2009, the firm estimated bad debt
expense for 2009 to be $2,000.
Give the required journal entries for the two
events, Show how the amounts related to Accounts
receivable and Bad debt expense would be reported
on the balance sheet and income statement for 2009.
55. In class problem #2
Barton’s year-end unadjusted trial balance
shows accounts receivable of
$1,000, allowance for doubtful accounts of
$6 (debit), and credit sales of
$2,000, uncollectibles are estimated to be
1% of credit sales. Prepare the year-end
adjust entry for uncollectibles. Show the
A/R accounts in B/S.
56. In-class problem #3
Suppose the beginning balance of A/R is $55,000, and
ADA is $290 (credit). Assuming Perpetual inventory
system. During the period.
Writes off a $750 account receivable arise from a sale
to Briggs Co. the dates to 10 months ago.
Received the full amount of $750 from Briggs Co. that
was previously written off.
Collected cash $5,250 from A/R.
Sold $7,000 of merchandise to customers on
credit, which cost the firm $4,000.
In the end of the period, the company estimated 1% of
accounts receivable bill be uncollectible.
Give the required journal entries and show how the
Accounts receivable and Bad debt expense would be
reported on the balance sheet and income statement.
57. In-class problem #4
Q1) The unadjusted balance of the allowance for doubtful accounts of
Johnstone Supplies, Inc., is a credit balance in the amount of
$20,000 on July 31, 2005, its fiscal year end. Assuming that
Johnstone uses the accounts receivable aging report, prepare the
adjusting journal entry to report bad expense.
Q2) August 5, 2005: YOC corporation, Johnstone’s customer, filed
bankruptcy. Accordingly, Johnston writes off $10,000 account
receivable from YOC. Prepare a journal entry to record the account
receivable write-off.
Q3) October 15, 2005: Based on the bankruptcy court’s
decision, Johnstone collects $5,000 accounts receivable from YOC
that they previously wrote off. Prepare a journal entry to record
the recovery of the accounts receivable.