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51 Cards in this Set
- Front
- Back
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Give a Journal Entry for Sale on Credit
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Account Receivable - Debit
Sales Revenue - Credit |
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What is the Journal Entry to Receive Payment on Credit Sale?
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Cash - Debit
Account Receivable - Credit |
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Where Will Sales and Collection on Credit Be Recorded After Journal Entries are Made?
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The General Ledger and the Accounts Receivable Ledger
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What is the Journal Entry if the Customer Pays Interest on Credit Sale
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Interest Receivable Debit
Interest Revenue Credit |
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When a Customer Uses a Credit or Debit Card, When Does the Seller Get Paid?
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Immediately Upon Deposit of Card Sales Receipt in the Bank
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How Much are the Fees Sellers Usually Pay to Credit Card Companies?
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1% to 5%
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What Factor Determines How Credit Card Sales Will Be Journalized
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Whether Cash is Received Immediately on Deposit or if Cash Or Later When the Card Company Makes a Payment
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Give a Journal Entry for Immediate Payment by Credit Card Company for a Credit Sale
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Cash - Debit
Credit Card Expense - Debit Sales Revenue - Credit |
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Give a Journal Entry for Delayed Payment by Credit Card Company for a Credit Sale
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Accounts Rec - Debit
Credit Card Expense - Debit Sales Revenue - Credit |
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What are Installment Accounts Receivable
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When Companies Allow Customers to Make Periodic Payments Over Several Months
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Why do Companies Accept Credit Sales If They Know They Will Incur Bad Debt
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Credit Sales Revenue Increase Total Sales and Revenues Enough to Offset Bad Debt
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What are 2 methods to Account for Uncollectible Accounts
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Direct Write-off
Allowance Method |
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Describe the Direct Write-Off Method of Accounting for Uncollectible Accounts
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We Record a Loss for an Uncollectible Account at the Time it Becomes Uncollectible
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Describe the Allowance Method of Accounting for Uncollectible Accounts
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We Create an Allowance Account Which is a Contra Asset Account to Accounts Receivable
It Matches Estimated Loss from Uncollectible Accn. Rec. Against the Sales They Helped Produce |
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Give a Journal Entry for a Bad Debt Write-Off
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Bad Debt Expense - Debit
Account Rec. (Cust.) Credit |
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What Must You do When You Receive Payment on a Bad Debt that has been Written Off
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First Reinstate the Bad Debt With a Debit to Account Rec. and a Credit to Bad Debt Expense
The Second Entry will Debit Cash and Credit Accn. Rec. |
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Discuss the Matching Principle as Applied to Bad Debt
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Expenses Need to Report in the Same Period as the Sales that Created Them
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Discuss the Materiality Principle as Applied to Bad Debt
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An Amount Can be Ignored If its Effects on the Financial Statements is Not Significant
A Company Can Use the Direct Write-Off Method if the Bad Debt Expense is Very Small in Relationship to Other Financial Items Such as Sales and Net Income |
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Give 2 Reason Why the Allowance Method for Accounting for Bad Debt is a Good Method
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It Records Estimated Bad Debt Expense in the Same Period as the Sales that Created It
It Reports Accounts Recievable at the Estimated Amount of Cash to be Collected |
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The Allowance for Doubtful Accounts is What Kind of Account?
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A Contra Asset Account to Accounts Recievable
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When Do we Make a Journal Entry for Bad Debt Expense
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We Make this Entry at the End of the Accounting Period
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On What Financial Statement is Bad Debt Expense Recorded
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The Income Statement
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What is Estimated Realized Value?
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Realized Value is the Expected Proceeds from Converting an Asset to Cash
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How do We Find the Estimated Realized Value of Accounts Receivable?
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Subtracting the Allowance for Doubtful Accounts from Accounts Receivable
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Do Accounts Receivable and Allowance for Doubtful Accounts Need to be Recorded Seperately on the Balance Sheet?
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No, they can be Reported Seperately or Together
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What is the Journal Entry for Estimated Bad Debt Expense that We Make at the End of the Period
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Bad Debt Expense Debit
Allowance for Bad Debt Credit |
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What is the Journal Entry to Write Off Bad Debt
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Allowance for Doubtful Accounts Debit
Accounts Receivable - Cust. Credit |
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When we Post the Bad Debt to the Customer's Account Receivable Account, What is the Affect
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It Takes the Amount Out of the Accounts Receivable, the General Ledger, and the Accounts Receivable Ledger
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Does Writing Off a Bad Debt Affect the Realized Value of Accounts Receivable? Why or Why Not?
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No. Assets and Net Income (Expense) Will Not be Affected Because the Write Off Doesn't Take Place Until the Next Period
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Give 2 Journal Entries to Re-instate and Collect Bad Debt Under the Allowance Method
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Accounts Rec. Customer -Debit
Allowance for Doubtful Accn - Credit Cash - Debit Accn Rec. Customer - Credit |
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When we Reinstate a Written Off Account for Payment do we Re-Instate the Full Amount or Partial Amount if the Customer Wants to Pay a Partial Amount
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This is a Matter of Judgement Based on Whether We Think They Will Pay the Full Amount or Not
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We Estimated Bad Debt Under the Allowance Method, What are the 3 Ways We Estimated Bad Debt
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Percent of Sales
Accounts Rec- Percent of Accounts Rec. Method Accounts Rec- Aging of Accounts Rec. Method |
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What is the Emphasis for Percent of Sales Method of Estimating Bad Debt
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It Uses Income Statement Focus with an Emphasis on Matching Sales to Bad Debt Expense
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What is the Emphasis for Percent of Receivables Method of Estimating Bad Debt
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It Uses Balance Sheet Focus with an Emphasis on Realizable Value
It Compares Accounts Receivable (Totals) to Allowance for Doubtful Accounts |
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What is the Emphasis for Aging of Receivables Methods of Estimating Bad Debt
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It Uses Balance Sheet Focus with an Emphasis on Realizable Value
It Compares Accounts Receivable (Individual) to Allowance for Doubtful Accounts |
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What is a Promissory Note?
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A Written Promise to Pay a Specified Amount of Money with Interest either on Demand or on a Specific Future Date
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What is the Maturity Date of the Note and the Period of the Note
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The Maturity Date is the Date the Principle and Interest Must be Paid
The Period is the Time from the Notes Contract Date to Its Maturity |
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When a Note is Expressed in Days, When Does the Period of the Note Start
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The Day After the Note's Day
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When a Note is Expressed in Months, When Does the the Period End
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However Many Months Later on the Same Day as the Original Date
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What is the Formula for Interest on a Note?
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Principal of the Note x Annual Interest Rate x Time Expressed in Years = Interest
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How Long is a Year When Computing Interest
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360 Days
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Give a Journal Entry for Sale on a 90 Day, 12% Note
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Notes Receivable - Debit
Sales - Credit |
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What is the Journal Entry if we Accept a Note and Cash to Settle an Accounts Receivable?
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Notes Receivable - Debit
Cash - Debit Accounts Receivable - Credit |
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What is the Journal Entry when Customer Honors a Note?
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Cash - Debit
Notes Receivable - Credit Interest Revenue - Credit |
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What is the Journal Entry to Handle a Dishonored Note?
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Accounts Rec. Customer - Debit
Interest Revenue - Credit Notes Receivable - Credit |
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Give a Journal Entry to Accrue Interest on a Note
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Interest Rec. - Debit
Interest Revenue - Credit |
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When we Record an Honored Note that had Accrued Interest, What is the Journal Entry?
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Cash - Debit
Interest Revenue - Credit Interest Receivable - Credit Notes Receivable - Credit |
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Give a Journal Entry to Sell Receivables Including the Buyer's Refactoring Fee?
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Cash - Debit
Factoring Fee Expense - Debit Accounts Receivable - Credit |
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When an Owner Pledges Receivables, Who has Risk of Bad Debt?
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The Owner Still Owns the Receivables and Still has Risk of Debt Unless they Default on their Loan
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When we Pledge Receivables to Obtain a Loan, What is our Journal Entry?
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Cash - Debit
Notes Payable - Credit |
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Give the Formula for Accounts Receivable Turnover? What Does it Tell Us?
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Net Sales/Average Accounts Receivable
It Tells us About the Quality and Liquidity of Receivables A Low Turnover May Mean Stricter Credit Policies are Needed |
