FA24 - Accounts Receivable - Aging of Receivables Method
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- čas přidán 25. 08. 2019
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Module 5 examines receivables. We learn about the allowance for doubtful accounts and writing off bad debts. We learn two allowance methods: the percentage of sales method (income statement method) and the aging of receivables method (balance sheet method).
i could cry with joy, your videos mean the world to me.
Everytime, I listen to you I understand very well thank you so much
Aging of receivables? More like "Good grades being made attainable!" Thanks again for these amazing videos.
you helped me on a 3 hour problem!! I was stuck on the A/R-Allowance=A/R,net... Thank you!!
Thank you Tony, that was so useful and clear explanation....
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your video is life saver
I wish my textbook explained the concepts as well as you do! Thank you!
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Thank you!
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Thank u so much sir
Thank you so much Prof. I would like to know more about that 800$ Bad debt Exp. Does this 800$ came from past journal entry before 31.july which company couldnt collect it or its another amount, could you please give us a clearer example of this 800$.? Thank you
I have the same doubt
Are we supposed to add $70,000 to the bad debt expense under 0-30 days as well since we the company made 70,000 in non-cash sales?
No! We did make 70K of non cash sales, but since we only have 5K in receivables, we must have already collected 65K. If I make a non-cash sale in March, I'll almost certainly have collected it by December 31.
Why didnt you add the $70,000 credit sales to the Net AR as shown in FA23? Please advice! Thank you.
I'm basically paraphrasing from one of Tony Bell's responses to another commenter. Basically, the $70,000 in non-cash sales was almost completely collected by the end of the fiscal year, and only $5,000 remained in A/R.
I still don’t get how when you spend MORE then it’s a debit. Doesn’t that make allowance less next yr? Yes I watched the other vid.😅
Aha now I got what do you mean by the allowance doubtful but is it for example some one comes after the end of Dec 31 and pay the amount we owe him then we debited the allowance to reduce it?
yes reduce allowance (dr) and reduce A/R (cr).
What if the AFDA had something in credit, would we add it with 800 to get afda and bad debt expense? or will we still use only 800 as the account for AFDA and BDE?
The amount we calculated was the ENDING BALANCE of our AFDA.
So if we started with a CR of 100 in the AFDA, and we calculate an ending balance of 300. Then our adjustment is by 200.
Does Debit side in allowance means 500 recovered or loss??
I think it means a loss, as in you recovered $500 less than what you were expecting to have recovered.
How to estimate those uncollectables %?
Is it just an assumption made or came out by some calculations?
It is generally estimated based on the company's history. In my questions, I make it up. In real life the company's accountant will consider historical trends.
What relevance does an 800 in the journal entry have in this instance you already have the 300? Or are you tryna pull one on a Poor Old Jim?
Nevermind, you said that it’s part of doing the “adjustment” in the video
why do you subtract 300 instead of 800 when finding the A/R net
Remember, at the start of the question there was a DEBIT balance of 500 in the allowance account. So when we adjust it by CR 800, it ends as a CR of 300.
where are you getting 500 from when you summed all the A/Rs to be 5000?
The debit of $500 was the initial balance in the allowance for doubtful accounts. Using the aging of receivables method, Tony calculated that the *ending* balance for the allowance for doubtful accounts had to be a credit of $300. Hence this account was credited $800 (while bad debt expense was debited $800).
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Where did you get 500?
Hope you’d already found your answer