0
The entry used to write off an uncollectible account using the allowance method for these bad debts will have which of the following effects on the financials?
Wiki User
∙ 7y agoWant this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
If the allowance method of accounting for uncollectible receivables is used what general ledger account is credited to write off a customer's account as uncollectible?
Allowance for Doubtful Accounts
Which account shows the amount of accounts receivable that a company does not expect to collect?
Allowance for Uncollectible Accounts
Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible True or False?
true
Is it true when using the allowance method of accounting for uncollectible accounts the entry to record the bad debt's expense's is a debit to Bad Debts Expense and a credit to Account's Receivable.?
No while using allowance method, bad debts are charged to allowance for bad debts account rather charging the accounts receivable because accounts receivable was already charged with allowance when it was created.
Allowance for doubtful accounts is listed on the balance sheet under what caption?
Answer:The allowance for uncollectible accounts is a contra T-account to accounts receivable. Both are presented under current assets. The allowance can also be subtracted from accounts receivables, showing the net value (common for listed companies).
If the allowance method of accounting for uncollectible receivables is used what general ledger account is credited to write off a customer's account as uncollectible?
Allowance for Doubtful Accounts
Which account shows the amount of accounts receivable that a company does not expect to collect?
Allowance for Uncollectible Accounts
Is bad debt expense account and allowance for uncollectible account is same account?
Bad debt expense account is the actual expense account for bad debts while allowance for doubtful account is the provision for account in case of any bad debts occurs in future.
Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible True or False?
true
Is it true when using the allowance method of accounting for uncollectible accounts the entry to record the bad debt's expense's is a debit to Bad Debts Expense and a credit to Account's Receivable.?
No while using allowance method, bad debts are charged to allowance for bad debts account rather charging the accounts receivable because accounts receivable was already charged with allowance when it was created.
Allowance for doubtful accounts is listed on the balance sheet under what caption?
Answer:The allowance for uncollectible accounts is a contra T-account to accounts receivable. Both are presented under current assets. The allowance can also be subtracted from accounts receivables, showing the net value (common for listed companies).
Which method of estimating uncollectible receivables focuses on Uncollectible-account expense for the income statement?
The percent of sales method
How do you set up the allowance for doubtful accounts?
Allowance for doubtful account is set up based on past experiance of uncollectibility of account receivable. There are two approach in calculating it. firstly based on net credit sales which calculate how much % of net credit sales in the past became uncollectible. secondly based on Account receivable balance which calculate how much % of AR balnce became uncollectible. the asumption here is what happened in the past wil occure repeatly in the future. normally companies using aging schedule. But it is better to use credit rating of our customer to estimate the uncolletible account.
Is delivery equipment a contra asset account?
No, it is not a contra asset account. By definition, a contra asset account is an account which typically carries a credit balance and is used to accumulate amounts that are reductions of assets. Two common contra asset accounts are Allowance for Uncollectible Accounts Receivable and Accumulated Depreciation. If the delivery equipment is owned by your company then it should be considered an asset.
What is the use of uncollectible accounting method?
Based on experience, a company will know that a certain percentage of their outstanding accounts receivable will be uncollectible, They apply this experience via a formula to approximate the dollar amount of uncollectible ,and set up an allowance for doubtful accounts (a contra-asset account) and the debit goes to bad debt expense .The formula might be as simple as 1% of total A/R or various percentages applied to an A/R aging (50% of over 90 days old +10% of over 60 day old etc.).At the end of each period, the allowance is adjusted and re calculated accordingly, up or down with the offset to bad debt expense.
How do you compute allowance for bad debts as a percentage of sales?
When looking at a financial statement, look at the income statement for 'bad debt expense'. Then look at Revenue for the same period. Bad Debt Expense divided by Revenue is your percentage. However, if you are making the financials and need to figure out what your allowance should be, you do two things to estimate your allowance: 1. Look at one to several years of A/R history. What percentage of sales each period has been uncollectible. You need time to show this history, so go as far back as you can. More that 5-7 years may be too much, depending on how steady your business is. This is a general reserve, based on your overall A/R. 2. If you know of any specific current A/R outstanding that is uncollectible, and it's greater than what you would generally reserve in #1 above, increase your current period bad debt expense to account for this extra potential loss.
Under the allowance method writing off an uncollectible account A affects only income statement accounts B is not acceptable practice C affects only balance sheet accounts D affects both?
The answer is C, it affects only balance sheet accounts.
