sometimes we have beginning article on startup or account sometimes we have
a sometimes we have one what will happen adjustment of course and we'll have an Andean and sometimes will operate aw and then a recovery or if you will but you only won a record year just meant for the be estimates when it asks your you recorded a bad debt expense a for the percentage outsells Matt that I and you want your record this widget the debit bad expense and the credit EA I'll when your accordion that estimates for the revenues already the sale that you think will become uncollectible Inc finally you for this fine B&N yeah allowance for doubtful accounts for the balance sheet not the course we need that number for
the balance sheet because what happens is when we have accounts receivables which what's a about this two million will need to know the be allowance for doubtful accounts ending balance because if we don't know that we're not gonna be able to figure the net realizable value for receivables so what's a its 60,000
this way will be able to figure out never rise will value per account receivables
think this is only gross receivables up here so it's gonna be one million and $900 and 40,000 which is the net realizable value or the net already net receivables I was trying to see their show we're gonna close this all
try to remember the rules as we go through this question and I'll bring up your gross receivables on the left one million sell 2 million net sales 129 while stirred up workout any for doesn't love Ines 4,000 I just say that is credits balance during the year 2012 first thing you want to do sure of that while stirred up what counts
T accounts and remember lucky I mean a 2011 same thing at the beginning of 2012 and was just great buy rating here died as the beginning balance ed for rating Arctic Council 30 2012 near
now we need to do the percentage of sales map it so we're gonna take the percentage which I'm going to give you bill you're on a test or quiz was eighty percent or uncollectible answer animals by this by the sale of course but which one are you the use net sales are you gonna use Hills where you reuse is the net sales and that's because if you think about it not still takes into account any returns were any discounts
so you're only your Brady 2 percent I'm collect the ball out whatever sales are laughed because but still look here this is gross sales and it doesn't take into account any return so think about it here: animals by 2 percent by need total sales somebody's might be returned then can you really say a return is uncollectible because
the person got their cash back for the return and therefore they don't know you any money so they can't really not pay here because they don't know you anybody
so remember it's always net sales that's the one wants by the percentage by so we'll take the two percent milk why by one point eats million on and it's going to be a 36 doubt parity headed up there there got your turn on my mic lots hi I'm I actually ran through this presentation so now that it's gonna be your bad debt expense and war have bad added your allowance for doubtful accounts are not because the course bad debt expense the be adjustments you're always gonna have the same number provided expense and allowance for doubtful accounts for the adjustment because it at the bombs because I've been double entry system of course so the adjustment it's for 36,000 which I've been cleared to rate their survey asked you for the adjustment for yes met uncollectible that's what you're a great there
and of course the any nonsense 4,000 was 36,000 got the book credits you land with 40,000 has your and
and what you need to do now finally is look at your girls accounts receivables because when you say if they prepare the receivables heard that your balance sheets so you'll say accounts receivables is 1,000,000 and thats you're in your corner can return it but because the course under Council always stick next to the account that be applied to you rate forty thousand there and you will have 960,000
as your net realizable value for your receivables and then you're done you have your net realizable value free receivables you had her an email transfer to workouts and you're just now if they ask you for any abuse 3 bangs and worry in this tutorial I just wanted to say something else in your book let me say the sales method is the approach that does the best job of demonstrating the matching grants the ball and the reason why is because their machain
the bad debt expense directly with the sales because they're multiplying the estimated bad debts expense
by the cells of course you're doing the best job with this method by macchine expenses wat the revenues earned in that period which is exactly that nation up the matching principle which is why it's not that does the best job %uh demonstrating the matching principal and we'll see what the receivables map it does the best job %uh the rain because each other on has an advantage and will see that in the next article
So I'm done for this tutorial I'll see you guys next one hope we understood everything.. Thanks for visited...
No comments:
Post a Comment