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vasaline
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| Posted: 16 May 2012 at 00:04 | IP Logged
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At the end of year 2, a major customer filed for
bankruptcy. How would you do the adjusting entry?
Would it be
Dr. Expense
Cr. Allowance for Doubtful Accounts
or
Dr. Allowance of Doubtful Accounts
Cr. Accounts Receivable
Thanks!
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austingolduk
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| Posted: 16 May 2012 at 16:44 | IP Logged
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The right thing to do is to reverse the initial entry for that customers in the books:
Dr Allowance for Doubtful accounts
Cr Account Receivable.
__________________
FAR-02/28/2012-PASSED
BEC-04/14/2012-PASSED
AUD-05/29/2012-PASSED
REG- 08/13/2012-?
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vasaline
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| Posted: 16 May 2012 at 21:35 | IP Logged
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That would seem like the right thing to do i believe that
you would need to include the expense in the financial
statements.
Btw if it wasn't clear this question is concerning a
subsequent event that happened before the balance sheet
date but one of the customers filed for bankruptcy after
the balance sheet date.
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maryk
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| Posted: 17 May 2012 at 11:30 | IP Logged
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The Bad Debt Expense would have been recorded at the time the Allowance was established (probable subsequent events are recorded). Therefore, when the loss occurs the entry would be:
Dr: Allowance
Cr: AR
__________________
REG: 86
FAR: 86
AUD: 87
BEC: 75
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pratik323
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| Posted: 17 May 2012 at 14:50 | IP Logged
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Hello,
In this post, everyone seems to have passed almost all
tests. Which program did you use? I am taking AUD in 2
weeks..any insights or tips on how to pass? Thanks.
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Topic: Adjusting entry help
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