Notice that the preceding entry reduces the receivables balance for the item that is uncollectible. The appropriate entry for the direct write-off approach is as follows: Under this technique, a specific account receivable is removed from the accounting records at the time it is finally determined to be uncollectible. Uncollectible accounts are frequently called “bad debts.”Ī simple method to account for uncollectible accounts is the direct write-offapproach. As a result, it becomes necessary to establish an accounting process for measuring and reporting these uncollectible items. Of course, a company does have legal recourse to try to collect such accounts, but those often fail. Customers go broke, become unhappy and refuse to pay, or may generally lack the ethics to complete their half of the bargain. Unfortunately, some sales on account may not be collected. Chapter 24: Analytics for Managerial Decision Making.Chapter 23: Reporting to Support Managerial Decisions.Chapter 22: Tools for Enterprise Performance Evaluation.Chapter 21: Budgeting – Planning for Success.Chapter 20: Process Costing and Activity-Based Costing.Chapter 19: Job Costing and Modern Cost Management Systems.Chapter 18: Cost-Volume-Profit and Business Scalability.Chapter 17: Introduction to Managerial Accounting.Chapter 16: Financial Analysis and the Statement of Cash Flows.Chapter 15: Financial Reporting and Concepts.Chapter 14: Corporate Equity Accounting.Chapter 12: Current Liabilities and Employer Obligations.Chapter 11: Advanced PP&E Issues/Natural Resources/Intangibles.Chapter 10: Property, Plant, & Equipment.Chapter 6: Cash and Highly-Liquid Investments.Chapter 5: Special Issues for Merchants.Chapter 1: Welcome to the World of Accounting.
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