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ALLOWANCE METHOD OF RECORDING LOSSES
FROM UNCOLLECTIBLE ACCOUNTS

        Uncollectible Accounts Expense
            Debit             Credit



             Accounts Receivable
            Debit             Credit



      Allowance for Uncollectible Accounts
            Debit             Credit


                                              Lesson 20-1, page 528
                                                  © South-Western
                                             Educational Publishing
ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE

+   −
÷   ×
Total Sales                        Estimate Uncollectible
on Account    ×   Percentage   =     Accounts Expense
$982,800.00   ×      1%        =         $9,828.00




                                              Lesson 20-1, page 529
                                                  © South-Western
                                             Educational Publishing
ANALYZING AND JOURNALIZING AN ADJUSTMENT
FOR UNCOLLECTIBLE ACCOUNTS EXPENSE


                                                     1
                                    2

                                        3   3




1. Enter and label credit amount.
2. Enter and label debit amount.
3. Record the adjusting entry.
                                                 Lesson 20-1, page 530
                                                     © South-Western
                                                Educational Publishing
POSTING AN ADJUSTING ENTRY FOR
UNCOLLECTIBLE ACCOUNTS EXPENSE
                        1. Debit
                        2. Credit


                1   2




                                     Lesson 20-1, page 531
                                         © South-Western
                                    Educational Publishing
TERMS REVIEW
 uncollectible accounts
 allowance method of recording losses
    from uncollectible accounts
 book value
 book value of accounts receivable




                                         Lesson 20-1, page 532
                                             © South-Western
                                        Educational Publishing

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Les 20 1

  • 1. ALLOWANCE METHOD OF RECORDING LOSSES FROM UNCOLLECTIBLE ACCOUNTS Uncollectible Accounts Expense Debit Credit Accounts Receivable Debit Credit Allowance for Uncollectible Accounts Debit Credit Lesson 20-1, page 528 © South-Western Educational Publishing
  • 2. ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE + − ÷ × Total Sales Estimate Uncollectible on Account × Percentage = Accounts Expense $982,800.00 × 1% = $9,828.00 Lesson 20-1, page 529 © South-Western Educational Publishing
  • 3. ANALYZING AND JOURNALIZING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE 1 2 3 3 1. Enter and label credit amount. 2. Enter and label debit amount. 3. Record the adjusting entry. Lesson 20-1, page 530 © South-Western Educational Publishing
  • 4. POSTING AN ADJUSTING ENTRY FOR UNCOLLECTIBLE ACCOUNTS EXPENSE 1. Debit 2. Credit 1 2 Lesson 20-1, page 531 © South-Western Educational Publishing
  • 5. TERMS REVIEW uncollectible accounts allowance method of recording losses from uncollectible accounts book value book value of accounts receivable Lesson 20-1, page 532 © South-Western Educational Publishing