Sesi 1 Receivables War22e - Ch09 Bagian 1

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Receivables
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After studying this chapter, you should
be able to:
1. Describe the common classifications
of receivables.
2. Describe the nature of and the
accounting for uncollectible
receivables.
3. Describe the direct write-off method
of accounting for uncollectible
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receivables.
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be able to:
4. Describe the allowance method of
accounting for uncollectible
receivables.
5. Compare the direct write-off and
allowance methods of accounting for
uncollectible accounts.
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be able to:
6. Describe the nature, characteristics,
and accounting for notes receivables.
7. Describe the reporting of receivables
on the balance sheet.
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9-1
Objective
Objective 11
Describe the
common
classifications of
receivables.
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9-1
Classification of Receivables
The term receivables includes

all money claims against other
entities, including people,
business firms, and other
organizations.
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9-1
Accounts Receivable
Accounts receivable are

normally expected to be
collected within a
relatively short period,
such as 30 or 60 days.
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9-1
Notes Receivable
Notes receivable are

amounts that customers
owe for which a formal,
written instrument of
credit has been issued.
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9-1
Other Receivables
Other receivables expected to be

collected within one year are
classified as current assets. If
collection is expected beyond one
year, these receivables are
classified as noncurrent assets and
reported under the caption
Investments.
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9-2
Objective
Objective 22
Describe the nature of
and the accounting for
uncollectible
receivables.
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9-2
Companies often sell their

receivables to other companies.
This transaction is called factoring
the receivables, and the buyer of the
receivables is called a factor.
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9-2
Uncollectible Receivables
There are two methods of

accounting for receivables that
appear to be uncollectible: the
direct write off method and the
allowance method.
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9-2
The direct write off method records
bad debt expense only when an
account is judged to be worthless.
The allowance method records bad
debt expense by estimating
uncollectible accounts at the end of
the accounting period.
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9-3
Objective
Objective 33
Describe the direct write-
off method of accounting
for uncollectible
receivables.
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Sales on Credit $4,200 from D. L. Ross
Journal : 1 Januari
Account Receivable- DL Ross 4,200
Sales 4,200
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9-3
Direct Write-Off Method
On May 10, a $4,200 accounts

receivable from D. L. Ross has been
determined to be uncollectible.
May 10 Bad Debt Expense 4 200 00

Accounts Receivable—D. L. Ross 4 200 00
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9-3
The amount written off is later
collected on November 21.
Nov. 21 Accounts Receivable—D. L. Ross 4 200 00

Bad Debt Expense
4 200 00
21 Cash 4 200 00
Accounts Receivable—D. L. Ross
4 200 00
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9-3
The amount written off is later
collected on Februari 21.(tahun
yg berbeda)
Nov. 21 Accounts Receivable—D. L. Ross 4 200 00
Pendapatan lainnya
4 200 00
21 Cash 4 200 00
Accounts Receivable—D. L. Ross
4 200 00
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9-3

Example Exercise 9-1
Journalize the following transactions using the

direct write-off method of accounting for
uncollectible receivables.
July 9 Received $1,200 from Jay Burke
and wrote off the remainder owed
of $3,900 as uncollectible.
Oct. 11 Reinstated the account of Jay Burke
and received $3,900 cash in full
payment. 17
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9-3
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Follow My Example 9-1
Master title style
July 9 Cash 1,200
Bad Debt Expense 3,900
Accounts Receivable—Jay Burke 5,100
Oct. 11 Accounts Receivable—Jay Burke 3,900
11 Cash 3,900
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For Practice: PE 9-1A, PE 9-1B
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9-4
Objective
Objective 44
Describe the allowance
method of accounting for
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9-4
Allowance Method
On December 31, ExTone Company estimates

that a total of $40,000 of the $1,000,000 balance
in her company’s Accounts Receivable will
eventually be uncollectible.
Dec. 31 Bad Debt Expense 40 000 00

Allowance for Doubtful Accounts
40 000 00
Uncollectible accounts
estimate.
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9-4
Net Realizable Value
The net amount that is expected to be

collected, $960,000 ($1,000,000 –
$40,000), is called the net realizable value
(NRV). The adjusting entry reduces
receivables to the NRV and matches
uncollectible expenses with revenues.
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9-4
On January 21, John Parker’s account totaling
$6,000 is written off because it is uncollectible.
Jan. 21 Allowance for Doubtful Accounts 6 000 00

Accounts Receivable—John Parker 6 000 00
To write off the uncollectible
account.
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9-4
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9-4
During 2008, ExTone Company writes
off $36,750 of uncollectible accounts,
including the $6,000 account of John
Parker. After posting all entries to
write-off uncollectible amounts, the
Allowance for Doubtful Accounts will
have a credit balance of $3,250
($40,000 – $36,750).
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9-4
ALLOWANCE FOR DOUBTFUL ACCOUNTS

Total Jan. 1, 2008 Bal.
{
accounts Jan. 21 6,000
written off Feb. 2 3,900 40,000
“ “
$36,750
“ “
Dec. 31 Unadjusted bal
3,250
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9-4
If ExTone Company had
written off $44,100 in accounts
receivable during 2008, the
Allowance for Doubtful
Accounts would have a debit
balance of $4,100.
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9-4

Total Jan. 1, 2008 Bal.
{
accounts Jan. 21 6,000
written off Feb. 2 3,900 40,000
“ “
$44,100
“ “
4,100
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9-4
Collecting a Written-Off Account
Nancy Smith’s account of $5,000

which was written off on April 2 is
later collected on June 10. Two
entries are needed: one to reinstate
Nancy Smith’s account and a second
to record receipt of the cash.
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9-4
Entry 1: Reinstate the account.
June 10 Accounts Receivable—Nancy Smith 5 000 00

Allowance for Doubtful Accounts 5 000 00
To reinstate the account
written off on Jan. 21.
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9-4
Entry 2: Record collection of cash.
June 10 Cash 5 000 00

Accounts Receivable—Nancy Smith 5 000 00
Collection of written-off
account.
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9-4

Journalize the following transactions using the

allowance method of accounting for
July 9 Received $1,200 from Jay Burke
and wrote off the remainder owed
of $3,900 as uncollectible.
Oct. 11 Reinstated the account of Jay Burke
and received $3,900 cash in full
payment. 31
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9-4
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Master title style
July 9 Cash 1,200
Allowance for Doubtful Accounts 3,900
Oct.11 Accounts Receivable—Jay Burke 3,900
11 Cash 3,900
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9-4
Estimating Uncollectibles
The allowance method uses two ways

to estimate the amount debited to Bad
Debt Expense.
1. Estimate based on a percentage
of sales.
2. Estimate based on analysis of
receivables.
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9-4
Estimate Based on a Percentage
of Sales
If credit sales for the period are

$3,000,000 and it is estimated that 1½ %
will be uncollectible, the Bad Debt
Expense is debited for $45,000
($3,000,000 x .015). This approach
disregards the balance in the allowance
account before the adjustment.
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9-4
After this adjusting entry is posted,
Allowance for Doubtful Accounts will
have a balance of $48,250.
Dec. 31 Bad Debt Expense 45 000 00
($3,000,000 x 0.015 =
$45,000).
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9-4
BAD DEBT EXPENSE
Dec. 31 Adj entry 45,000
Dec. 31 Adjusted bal. 45,000
{
Total Jan. 1, 2008 Bal. 40,000
accounts Jan. 21
written off
6,000 “
$36,750
Feb.“ 2
3,900
3,250
Dec. 31 Adj. entry 36
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45,000
Dec. 31 Adjusted bal.
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9-4

At the end of the current year, Accounts Receivable has

a balance of $800,000; Allowance for Doubtful
Accounts has a credit balance of $7,500; and net sales
for the year total $3,500,000. Bad debt expense is
estimated at ½ of 1% of net sales.
Determine (a) the amount of the adjusting entry for
uncollectible accounts; (b) the adjusted balances of
Accounts Receivable, Allowance for Doubtful
Accounts, and Bad Debt Expense; and (c) the net
realizable value of accounts receivable. 37
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9-4
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(a) $17,500 ($3,500,000 x .005)
Adjusted Balance
(b) Accounts Receivable $800,000
Allowance for Doubtful Accounts
($7,500 + $17,500) 25,000
(c) $775,000 ($800,000 – $25,000)
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9-4
Estimating Uncollectibles Based
on Analysis of Receivables
The longer an account receivable is

outstanding, the less likely that it will be
collected. Basing the estimate of
uncollectible accounts on how long specific
amounts have been outstanding is called
aging the receivables.
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9-4
Aging of Accounts
Receivables
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9-4
Estimate of
Uncollectible Accounts
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9-4
Collection Rates by Number of
Months Past Due
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9-4
Estimate Based on Analysis of
Receivables
If it is estimated that $3,390 of the

receivables will be uncollectible and
the Allowance for Uncollectible
Accounts currently has a balance of
$510, the Bad Debt Expense must be
debited for $2,880 ($3,390 – $510).
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9-4
Estimate Based on Analysis of
Receivables
Aug. 31 Bad Debt Expense 2 880 00

($3,390 – $510).
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9-4
BAD DEBT EXPENSE
Aug. 31 Adj. entry 2,880
Aug. 31 Adj. bal. 2,880

Aug. 31 Unadj. bal. 510
Aug. 31 Adj. bal. 3,390
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9-4
If the unadjusted balance of
Allowance for Uncollectible
Accounts had been a debit
balance of $300, the amount of
the adjustment would have been
$3,690 ($3,390 + $300).
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9-4
BAD DEBT EXPENSE
Aug. 31 Adj. bal. 3,690

Aug. 31 Unadj. bal. 300 Aug. 31 Adj. entry 3,690
Aug. 31 Adj. bal. 3,390
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9-4

At the end of the current year, Accounts Receivable has a

balance of $800,000; Allowance for Doubtful Accounts
has a credit balance of $7,500; and net sales for the year
total $3,500,000. Using the aging method, the balance of
Allowance for Doubtful Accounts is estimated as $30,000.
Determine (a) the amount of the adjusting entry for
uncollectible accounts; (b) the adjusted balances of
Accounts Receivable, Allowance for Doubtful Accounts,
and Bad Debt Expense, and (c) the net realizable value of
accounts receivable.
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9-4
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Master title style
(a) $22,500 ($30,000 – $7,500)
Adjusted Balance
(b) Accounts Receivable $800,000
(c) $770,000 ($800,000 – $30,000)
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1

Click to edit Master title style 9

Click to edit Master title style

Click to edit Master title style

Click to edit Master title style

The term receivables includes

Accounts receivable are

Notes receivable are

Other receivables expected to be

Companies often sell their

There are two methods of

Click to edit Master title style

On May 10, a $4,200 accounts

May 10 Bad Debt Expense 4 200 00

Nov. 21 Accounts Receivable—D. L. Ross 4 200 00

Click to edit Master title style

Journalize the following transactions using the

On December 31, ExTone Company estimates

Dec. 31 Bad Debt Expense 40 000 00

The net amount that is expected to be

Jan. 21 Allowance for Doubtful Accounts 6 000 00

ALLOWANCE FOR DOUBTFUL ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Nancy Smith’s account of $5,000

June 10 Accounts Receivable—Nancy Smith 5 000 00

June 10 Cash 5 000 00

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Journalize the following transactions using the

The allowance method uses two ways

If credit sales for the period are

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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At the end of the current year, Accounts Receivable has

(c) $775,000 ($800,000 – $25,000)

The longer an account receivable is

If it is estimated that $3,390 of the

Aug. 31 Bad Debt Expense 2 880 00

ALLOWANCE FOR DOUBTFUL ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Click to edit Master title style

At the end of the current year, Accounts Receivable has a

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