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Accounting Notes
Receivables:
Accounts Receivable - amounts to be collected from customers for goods or services provided
Notes Receivable - a written promise for the future collection of cash
Accounting for Uncollectible Accounts:
Allowance Method: - recording collection losses on the basis of estimates
Two methods of estimating the Uncollectible Accounts expense:
Percent of Sales - Income Statement approach
- computes uncollectible accounts expense as a percentage of net credit
sales
Adjusting Entry:
Uncollectible Account s Exp Net credit sales * %
Allowance for D. A. Net credit sales * %
Aging of Account s Receiva ble - Balance Sheet approach
- estimates bad debts by analyzing individual accounts
receivables according to the length of time they are
past due.
Customer N ame 1 -30 31- 60 61-9 0 Ove r 90 Total
Names X X
X X
X X
X X
X X
Totals X X X X XX
% Uncollectible % % % %
Allow. for D.A Bal. X + X + X + X = X
Desired Ending Balance
Adjusting Entry:
Uncollectible Account s Exp Desired End Bal. - Cu rr ent Bal.
Allowance for D.A Desired End Bal. - Cu rr ent Bal.
Writting off an Uncollectible Account:
Allowance for D.A. Amount u nco llect ible
Acct . Re c. - Customer name Amount u nco llect ible
Student Learning Assistance Center, San Antonio College, 2004
Bad Debts, Credit Card Sales, Notes Receivable
