Accounting for Uncollectible Accounts Receivable

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Chapter 17

• Accounting for Uncollectible Accounts Receivable

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Uncollectible accounts
Accounts receivable that cannot be
collected Prior to selling on account businesses
perform a thorough credit check (past performance
is the best indicator of future
performance) Calculated using previous
experience and analysis Calculating the estimate
of uncollectible accounts (expense) during the
same fiscal year revenue is earned meets the
accounting concept of matching expenses with
revenue Does not affect Accounts Receivable
balance, only the book value
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ESTIMATING AND RECORDING UNCOLLECTIBLE ACCOUNTS
EXPENSE
page 515
12,873.30

1.0

1,287,330.00
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ANALYZING AND JOURNALIZING AN ADJUSTMENT FOR
UNCOLLECTIBLE ACCOUNTS EXPENSE
page 516
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1. Enter and label credit amount.
2. Enter and label debit amount.
3. Record adjusting entry.
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Writing off and collecting uncollectible accounts
receivable
Writing off an account canceling the balance of
a customer account because the customer does not
pay
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JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT
RECEIVABLE
page 519
January 4. Wrote off Metro Food Courts past-due
account as uncollectible, 1,621.00. Memorandum
No. 3.
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1. Debit
2. Credit and customers name
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POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE
ACCOUNT RECEIVABLE
page 520
1. Post the debit amount to general ledger.
2. Post the credit amount to general ledger.
3. Post the credit amount to customer account.
4. Write Written off in the customer account.
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REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF
page 521
January 30. Received cash in full payment of
Metro Food Courts account, previously written
off as uncollectible, 1,621.00. Memorandum No. 5
and Receipt No. 12.
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• 1. Enter a debit to Accounts Receivable. Place a
  diagonal line in the Post. Ref. column.

2. Enter a credit to Allowance for Uncollectible
Accounts.
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RECORDING CASH RECEIVED FOR AN ACCOUNT PREVIOUSLY
WRITTEN OFF
page 522
January 30. Received cash in full payment of
Metro Food Courts account, previously written
off as uncollectible, 1,621.00. Memorandum No. 5
and Receipt No. 12.
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POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF
ACCOUNT RECEIVABLE
page 523
1. Post the general journal entry to the general
ledger.
2. Post the debit portion of the general journal
entry to the customer account.
3. Write the words Reopen account in the Item
column of the customer account.
4. Post the cash receipts journal entry to the
customer account.
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