Download direct write-off method of recording losses from uncollectible accounts

LESSON 7-1
Direct Write-Off Method of
Recording Uncollectible
Accounts
Uncollectible accounts
Direct write-off method
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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Chapter 7 Objectives
Accounting for Uncollectible Accounts
After studying Chapter 7, you will be able to:
 Define accounting terms related to uncollectible accounts.
 Identify accounting concepts and practices related to uncollectible accounts.
 Calculate and record estimated uncollectible accounts expense using the
direct write-off method.
 Calculate and record estimated uncollectible accounts expense using the
allowance method.
 Calculate and analyze accounts receivable turnover ratios.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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Lesson 7-1
 uncollectible accounts: accounts receivable that cannot
be collected
 writing off an account: canceling the balance of a
customer account because the customer is not expected to
pay
 direct write-off method of recording losses from
uncollectible accounts: recording uncollectible accounts
expense only when an amount is actually known to be
uncollectible
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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RECORDING UNCOLLECTIBLE
ACCOUNTS EXPENSE
page 201
November 15. Wrote off James Nordquist’s past due account as
uncollectible, $50.00. Memorandum No. 21.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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COLLECTING A WRITTEN-OFF
ACCOUNT— DIRECT METHOD
page 202
January 21. Received cash in full payment of James Nordquist’s
account, previously written off as uncollectible, $50.00. Memorandum
No. 54 and Receipt No. 49.
1
2
1. Make an entry to reopen the account.
2. Make an entry to record the cash receipt.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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DEFINE TERMS REVIEW
In Quizlet
page 203
Create: Chapter 7 AdvAcc (then SAVE)
 uncollectible accounts
 writing off an account
 direct write-off method of recording losses from
uncollectible accounts
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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Exit Ticket for today:
Audit Your Understanding 7-1
In a Word Document, SaveAS: Chapter7-1AYUYourName
And drop in my Inbox today!
1. Why should the amount of an uncollectible account
be removed from the assets of a business?
2. In the direct write-off method, how is an uncollectible
account closed?
3. Why is the customer account reopened when cash
is received for an account previously written off as
uncollectible?
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1
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Complete the following assignments for
Chapter 7-1 today
 Define Terms Review on page 201.
 Answer Audit Your Understanding questions on page
201.
 Complete Work Together 7-1 on Aplia – page 201.
 Complete On Your Own 7-1 on Aplia – page 201.
 Complete Application Problem 7-1 on Aplia – page
215.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 7-1