1 / 7

Planning and Recording Uncollectible Accounts Expense Adjustment

Learn how to estimate and record adjustments for uncollectible accounts expenses in financial statements. Understand the allowance method and its impact on book value.

morais
Download Presentation

Planning and Recording Uncollectible Accounts Expense Adjustment

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. LESSON 14-4 Planning and Recording an Allowance for Uncollectible Accounts Adjustment

  2. 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

  3. 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

  4. Total Saleson Account × Percentage = EstimatedUncollectibleAccounts Expense ESTIMATING UNCOLLECTIBLE ACCOUNTS EXPENSE page 420 $124,500.00 × 1% = $1,245.00 LESSON 14-4

  5. 3. Label the two parts with a small letter e in parentheses. 3 3 ANALYZING AND RECORDING AN ADJUSTMENT FOR UNCOLLECTIBLE ACCOUNTS EXPENSE page 421 1 2 1. Enter the estimated uncollectible amount. 2. Enter the same amount in the Adjustments Debit column. LESSON 14-4

  6. 14-4 Work Together 424,000 x .005 = $2,120 LESSON 14-4

  7. TERMS REVIEW page 422 • uncollectible accounts • allowance method of recording losses from uncollectible accounts • book value • book value of accounts receivable LESSON 14-4

More Related