A/R - Percentage Of Sales Method Flashcards
1
Q
How does the percentage of sales method work?
A
A bad debt expense percentage is applied to total accounts receivable amount
2
Q
How are percentage of sales method bad debt expenses journal entries done?
A
Bad debt expense is debited (to increase it)
Allowance for doubtful accounts is credited
3
Q
What is a/r, net?
A
A/R subtract allowance = a/r, net
4
Q
What is a/r net?
A
A/R net is accounts receivable amount after an allowance has been deducted
An allowance is an estimate as to what a/r might not be paid to the business
5
Q
What is unpaid a/r referred to as?
A
Bad debt
6
Q
What does a credit/debt balance in your allowance mean?
A
Credit balance in allowance means all allowance wasn’t used up
Debit balance in allowance means all allowance was used up
