accounting chapter 8
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17 terms
Terms | Definitions |
|---|---|
 Record received a note | Dr. Notes receivable Cr. Accounts receivable |
| Record Accrued interest earned, but not yet received | dr. interest receivable cr. interest revenue |
| record sale / cost of merchandise | dr. Accounts receivable cr. Sales dr. Cost of goods sold cr. Merchandise inventory |
| record sale of merchandise on note | dr. notes receivable cr. sales dr. cost of goods sold cr. merchandise inventory |
| record sale of merchandise on account | dr. accounts receivable cr. sales dr. cost of goods sold cr. merchandise inventory |
| record collect company note in full | dr. cash cr. note receivable cr. interest revenue |
| record payment of merchandise | dr. cash dr. sales discounts cr. accounts receivable |
| receivables turnover ratio | net credit sales / average account receivables |
| average collection period | 365 days / receivables turnover ratio |
| direct write-off method | charges the loss to Bad Debts Expense dr. bad debts expense cr. accounts receivable (to write off company account) |
| allowance method | involves estimating uncollectible accounts at the end of each period. companies use this for important bad debts. dr. bad debts expense cr. allowance for doubtful accounts |
| cash (net) realizable value | the net amount a company expects to receive in cash from receivables |
| recording a write-off | dr. allowance for doubtful accounts cr. accounts receivable |
| recording recovery of uncollectible account | dr. accounts receivable cr. allowance for doubtful accounts dr. cash cr. accounts receivable |
| percentage of receivables basis | management establishes a percentage relationship between amount of receivables and expected losses from uncollectable accounts |
| aging the accounts receivable (aging schedule) | a schedule where it classifies customer balances by the length of time they have been unpaid |
| a note is honored when | its maker pays in full at its maturity date. |
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