Accounting Lecture 09 - Accounts Receivable and Uncollectible Accounts

Accounting for uncollectible accounts and account write-offs using the Direct Write-Off and the Allowance methods. Bad debt expense entries, the subsidiary Accounts Receivable ledger, and net realizable value.

Category:

Education

Tags:

• introduction
• to
• accounting
• bookkeeping
• finance
• principles
• matching
• materiality
• entries
• entry
• lecture
• lesson
• financial
• managerial
• uncollectible
• accounts
• receivable
• write-off
• direct
• charge-off
• allowance
• method
• bad
• debts
• expense
• loss
• subsidiary
• ledger
• net
• realizable
• value

[llrond]

That was the most confusing 15 minutes of my life. Nonetheless, I grasp the idea of it. Thanks

[AccountingTutor]

@llrond Hey now, it wouldn't be accounting if you could grasp it all the first time around. That's why they pay CPA's so much to do the work! :) Try replaying the video several times, use pause, and take notes. You'll eventually get there...

[llrond]

@AccountingTutor So using the Income Statement Approach, the value of 2 sides of the balance sheet (A, L, OE) remain unchanged no matter how much money is uncollected? The Balance Sheet Approach on the other hand, you have to credit/debit the 2 accounts Uncollected Accounts Expense and Allowance for Uncollected Accounts, which results in changing the value of 2 sides of the balance sheet? The Income Statement Approach doesn't seem to accurately reflect the company's ability to collect receivable

[AccountingTutor]

@llrond

You're partially correct, but remember that year-end entry. Under either approach, the net realizable value of the accounts (asets, on the balance sheet) is reduced when the year-end entry is made, and so is owner's equity (the expense that is recorded will appear on the income stmt. and will reduce owner's equity when the closing entries are made). But following that, when an account is later written off only the Allowance account and Acct's Receivable are affected.

[Sidewinded]

@mairagab yeah the S's are very.. ssssnake like :P

[mairagab]

explanation is good but, u r too close to microphone and it is annoying, thnks anyway

[MrMyth023]

you are the man made soo much sense thank you soo much :)

[mypetmeatball]

This was great.

[abearbodies]

Took three days to understand it but I got it now haha : )

[hatimnajjar]

Your videos are great! Do you have any new ones yet??? Please upload them. If you can do managerial accounting in addition to financial accounting, it would be excellent. Thanks again for your hard work. You are a great teacher!

[haosmark]

Good lecture, subscribing, hope to see more in the future. Thanks.

[hatimnajjar]

Are you going to post more videos anytime soon? I am still waiting for your new tutorials. Thanks for all of your great efforts to make it easy and interesting.

[AccountingTutor]

@0neSun

I'm glad it was helpful. :)

I'll do one on capital assets next, but it'll be a while before I'll be able to complete it for YouTube.