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Lecture Notes for ACIS 2115 - Principles of Accounting with Easterwood at Virginia Tech (VT)

Notes Information

Material Type:Review Sheet 3
Professor:Easterwood
Class:ACIS 2115 - Principles of Accounting
Subject:Accounting & Information Systems
University:Virginia Polytechnic Institute And State University
Term:Fall 2008
Keywords:
  • Book Values
  • Percentage of Credit Sales Method
  • Common Stock Transactions
  • Particularly
  • Complete Replacement
  • Past Transactions
  • Authorized Shares
  • New Product Process
  • New-Product Process
  • Notes Receivables
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Sample Document Text

Accounting Exam 3 review sheet ( Chapters 8.5-11.5) Estimating Bad Debt Expense • Two Methods o Aging of accounts receivable method(the balance sheet approach)  Uses one balance sheet account(accounts receivable) to estimate the appropriate amount for another balance sheet account (allowance for doubtful accounts)  Estimates bad debts on the “age” of each amount in accounts receivables  three steps • Prepare an aged listing of accounts receivable o Totals for each aging category • Estimate bad debt loss percentages for each category o Varies according to company circumstances o The longer an account remains unpaid the less likely it is so be repaid o Compute the total estimate by multiplying the totals in step one by the percentages in step two and then summing across all aging categories  Produces the desired balance  Allowance for doubtful accounts in a permanent account • must take previous balance into account when determining adjustment o Percentage of credit sales method (inco...

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