Chapter 8: Accounting for Receivables

Question 1

What is an Account Receivable

Answer 1

Product or service is delivered or performed but the money has not yet been received

Question 2

Journal entries Account Receivable

Answer 2

1. Account Receivables Dr (A+) & Revenue Cr (E+)
2. Cash Dr (A+) & Account receivables Cr (A-)

Question 3

Valuing Account Receivable

Answer 3

• Direct Write-off Method
• Allowance Method

Question 4

Direct Write-off

Answer 4

Wait up until the point when the customer cannot pay us, and if they cannot pay us we get rid of the receivable

Question 5

Allowance Method

Answer 5

We forecast that some people cannot pay us
- Aging Method
- Percent-of-Receivable

Question 6

Direct Write off for Uncollectible Account Journal Entry

Answer 6

Bad Debt Expense Dr (E-) & Acc Receivable Cr (A-)

Question 7

Accounts receivable Estimation calculation Direct Write off for uncollectible account

Answer 7

Beginning Receivables + Sales on account - written-offs - collections = ending receivable

Question 8

Allowance Method Aging Receivable (Journal Entry

Answer 8

Bad Debt Expense Dr (E-) & Allowance for doubtful Receivables Cr (A-)

Question 9

Write-off Uncollectible Accounts

Answer 9

Allowance for doubt. receivable Dr (A+) & Accounts Receivable Cr (A-)

Question 10

Calculating Ending Allowance for Doubtful Receivables

Answer 10

Beginning allowance + Bad debt Expense - Write-offs = ending Allowance

Question 11

Recovery of Uncollectible Accounts

Answer 11

1. Acc. Receivable Dr (A+) & Allowance for Doubt. Cr (A-)
2. Cash Dr (A+) & Account Receivable Cr (A-)

Question 11

Recovery of Uncollectible Accounts

Answer 11

1. Acc. Receivable Dr (A+) & Allowance for Doubt. Cr (A-)
2. Cash Dr (A+) & Account Receivable Cr (A-)

Question 12

What are Notes Receivable

Answer 12

a written promise to pay for an amount on demand or specific time

• Involved parties: Payee (to whom money is owed) & Maker (a party that borrows & owes money)
• Cost components: Amount, Interest, and Maturity Value
• Time Components: Maturity Date, Term

Question 13

Recording Notes Receivable

Answer 13

1. Recognize the note
   Notes Receivable Dr (A+) & Cash Cr (A-)
2. Accrued Interest
   Interest Receivable Dr (A+) & Interest Revenue Cr (E+)
3. Being Paid back
   Cash Dr (A+) (money + money with interest) & Cr : Note Receivable (A-), Interest receivable (A-), Interest Revenue (E+)