Chapter 13: Adjustments Flashcards
Bad debt
Specific debtors that are written off, as proof exists that the debtors in all probability will not be able to pay their debts.
Accounting Entry:
Bad Debt written off
Dt - Bad Debts
Cr - Debtors
Two different types of bad debts recouped/recovered:
- Written off in the current year and collected in the same year.
- Written off in the previous year and collected in the current year.
Accounting Entry:
Collection of bad debt written off in the same year
Dt - Bank
Cr - Bad Debts
Accounting Entry:
Collection of bad debt written off in a previous year
Dt - Bank
Cr - Bad debt recouped
Accrued expense
An expense that is applicable to a specific financial period, but has not been paid at year-end.
Accounting Entry:
Accrued Expense
Dt - Expense
Cr - Accrued Expense
Accounting Entry:
Accrued expense paid
Dt - Accrued expense
Cr - Bank
Prepaid expense
An expense that is paid in the current financial period, but is applicable to a future financial period.
Accounting Entry:
Prepaid expense
Dt - Prepaid expense
Cr - Expense
Accounting Entry:
Prepaid expense written back
Dt - Expense
Cr - Prepaid expense
Income receivable
An income applicable to a specific financial but one that has not been received at year-end.
Accounting Entry:
Income receivable
Dt - Income receivable
Cr - Income
Accounting Entry:
Income receivable received
Dt - Income
Cr - Income receivable
Income received in advance
Income received in the current financial period, but is applicable to a future financial period.
