课件_中级财务会计Ⅰ.pptVIP

EastCo’s unadjusted, existing balance in allowance for uncollectible accounts is $500. Our aging procedure in steps one through three resulted in a $1,350 desired balance in allowance for uncollectible accounts. In step four of the process, we compare the desired balance with the existing balance. The difference in the two balances is the amount of our bad debt adjusting entry that results in the desired balance in allowance for uncollectible accounts. Now let’s prepare the entry to record bad debt expense. If we want the balance to be $1,350, we only need to credit the allowance for uncollectible accounts for $850. We debit bad debt expense and credit allowance for uncollectible accounts for $850. The actual write-off of a receivable occurs when it is determined that all or a portion of the amount due will not be collected. Using the allowance method, the write-off is recorded as a debit to allowance for uncollectible accounts and a credit to accounts receivable. Note that, because both accounts receivable and the allowance for uncollectible accounts are being reduced, the net carrying value of accounts receivable (which is the account receivable minus the allowance) is unchanged. That net carrying value changes when we recognized bad debt expense, not when we write off specific bad debts. Sometimes, after an account receivable has been written off, a customer will send in a payment. When this happens, two entries are necessary. The first entry is required to reverse the write-off and re-establish the account receivable. This entry includes a debit to accounts receivable and a credit to allowance for uncollectible accounts. The second entry records the receipt of cash with a debit to cash and a credit to accounts receivable. If uncollectible accounts are immaterial, bad debts are simply recorded as they occur (without the use of an allowance account). When using the direct write-off method, customers’ accounts receivable are written off to bad debt