怀尔德《会计学原理》Chapter-09.pptVIP

* Musicland’s Bad Debt Expense would be $2,400. This is determined by multiplying the credit sales of $400,000 by 0.6 %. Musicland will debit Bad Debts Expense and credit Allowance for Doubtful Accounts for $2,400. * Now, let’s switch our focus to the Percent of Accounts Receivable Method. Let’s first look at the method that uses a percent of the accounts receivable balance to arrive at bad debts expense. First, when using the Percent of Accounts Receivable Method, the estimate at the end of the period is determined by taking the Accounts Receivable balance and multiplying by an established bad debt percentage. The bad debt percentage is determined based on past history of the company and current economic trends. This computation provides the company with the balance desired in the Allowance for Doubtful Accounts. Second, because the Allowance for Doubtful Accounts is a permanent account, it will always have a balance in it. As a result, when we determine the desired balance in step one, we have to then look and see what balance is already in the Allowance for Doubtful Accounts and make the entry for the amount needed to arrive at the desired balance. Let’s look at an example to see how this works. * Musicland has $50,000 in accounts receivable and a $200 credit balance in Allowance for Doubtful Accounts on December 31, 2009. Past experience suggests that 5% of receivables are uncollectible. Let’s record Musicland’s Bad Debts Expense for 2009. * Part I First, we must determine the desired balance in the Allowance for Doubtful Accounts. To do this, Musicland multiplies the Accounts Receivable balance of $50,000 by the five percent that is expected to be uncollectible. The result of $2,500 represents the desired balance in Allowance for Doubtful Accounts. Part II Remember that Allowance for Doubtful Accounts is a permanent account and already has a $200 credit balance. So, if we want the balance to be $2,500, we only need to credit this account for $2,300.