Acc 400 Week 1
Assignments from the Readings
ACC/400
July 15, 2013
Assignments from the Readings
Chapter 8,
Question 3: What are essential features of the allowance method of accounting for bad debt?
According to Kimmel, Weygandt, & Kieso,2007: 1. Estimated uncollectible accounts receivable: These accounts match them against revenues in the same accounting period.
2. “Record estimated uncollectible as an increase (a debt) to bad debt expense and an increase ( a credit) to Allowance for Doubtful Accounts through an adjusting entry at the end of each period”.
3. Debt Actual uncollectibles- actual accounts are debited to the Allowance for Doubtful Accounts and then credits them to accounts receivable at the time the specific account is written off as uncollectible.
Question 4: The cash realizable value does not decrease when an …show more content…
uncollectiable account is written off under the allowance method because accounts receivable and allowance for doubtful accounts debit the same amount. Even though the uncollectable account is written off, the cash realizable value decreases as well.
E8-5
A: Determine the total estimated uncollectibles =$8,912
[pic]
B: Adjustment Entry at March 31,200 to Record bad debts expense- $8,912-$2,200=$6,712
Bad debt expense: $6,712
Allowance for Doubtful accounts: $6,712
C: Receivables have increased from 2006 to 2007 but customers were taking longer to pay causing bad debt to rise.
This is because all the older accounts rose in 2007
Chapter 9
E9.9
A: Food Lion must write down the current carrying value of its unprofitable stores because all companies should practice strong accounting skills including documentation (accounting principles). It will show assets a company doesn’t have in their accounts because the value of the stores would increase causing false information. B: The recent $9.5M charge to write down these impaired assets is considered a noncash expense because charges against income are noncash transactions. This means that there isn’t any reason to record the change. This happens because when the impaired asset is recorded, the debt is a loss amount and the credits appears in the asset
account.
References
Kimmel, P.D., Weygandt, J.J., & Keiso, D.E (2013, July 11). Financial accounting: Tools for business decision making ( 4th ed.). Hoboken, NJ: John Wiley & Son
ACC/400
July 15, 2013
Assignments from the Readings
Chapter 8,
Question 3: What are essential features of the allowance method of accounting for bad debt?
According to Kimmel, Weygandt, & Kieso,2007: 1. Estimated uncollectible accounts receivable: These accounts match them against revenues in the same accounting period.
2. “Record estimated uncollectible as an increase (a debt) to bad debt expense and an increase ( a credit) to Allowance for Doubtful Accounts through an adjusting entry at the end of each period”.
3. Debt Actual uncollectibles- actual accounts are debited to the Allowance for Doubtful Accounts and then credits them to accounts receivable at the time the specific account is written off as uncollectible.
Question 4: The cash realizable value does not decrease when an …show more content…
uncollectiable account is written off under the allowance method because accounts receivable and allowance for doubtful accounts debit the same amount. Even though the uncollectable account is written off, the cash realizable value decreases as well.
E8-5
A: Determine the total estimated uncollectibles =$8,912
[pic]
B: Adjustment Entry at March 31,200 to Record bad debts expense- $8,912-$2,200=$6,712
Bad debt expense: $6,712
Allowance for Doubtful accounts: $6,712
C: Receivables have increased from 2006 to 2007 but customers were taking longer to pay causing bad debt to rise.
This is because all the older accounts rose in 2007
Chapter 9
E9.9
A: Food Lion must write down the current carrying value of its unprofitable stores because all companies should practice strong accounting skills including documentation (accounting principles). It will show assets a company doesn’t have in their accounts because the value of the stores would increase causing false information. B: The recent $9.5M charge to write down these impaired assets is considered a noncash expense because charges against income are noncash transactions. This means that there isn’t any reason to record the change. This happens because when the impaired asset is recorded, the debt is a loss amount and the credits appears in the asset
account.
References
Kimmel, P.D., Weygandt, J.J., & Keiso, D.E (2013, July 11). Financial accounting: Tools for business decision making ( 4th ed.). Hoboken, NJ: John Wiley & Son