Answered: How would the transactions be…

How would the transactions be reconciled if the allowance for bad debt is converted to a bad debt write off but the company is able to recoup the funds?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 1DQ

See similar textbooks

Related questions

Q: (a) In a troubled-debt situation, why might the creditorgrant concessions to the debtor?(b) What…

A: (a)The creditor mostly grants the borrower with certain concessions with regard to the settlement.…

Q: How to incease profitability in a service company if Operating cash does not cover debt?

A: operating cash flows - cash flows from the operations of the business are known as operating cash…

Q: Compare and contrast the percent of sales and analysis of receivables method for determining bad…

A: Bad debt is categorized as an expense, which emerges when an account receivable no longer remains as…

Q: What type of concessions might a creditor grant the debtor in a troubled-debt situation?

A: Debt is the amount owed by the company for a particular period from the date of the company's…

Q: The following are goals‘and objectives in working-capital management. Which is the LEAST ACCURATE?…

A: Working capital is the capital required for the day-to-day operation of the business. If this amount…

Q: What evidence is necessary to demonstrate the ability toconsummate the refinancing of short-term…

Q: The direct write-off method is generally not permitted for financial reporting purposes because a.…

A: In direct write off method, bad debt expenses are recorded at the time we know account is…

Q: Many types of debt including auto loans, student loans and credit debt are securitized. The…

A: Securitization is the procedure where an issuer designs a marketable financial instruments by…

Q: If households and businesses lend their surplus cash directly to borrowers, there would be no need…

A: Solution: Financial institution facilitates the flow of funds between the individuals and or the…

Q: What are some different methods that can be used for customer returns/bad debt? which way do you…

A: Solution: The customer returns can be accounted through two method: One is directly debiting the…

Q: Which of the following is NOT a reason for sales discounts to be offered to the debtors(customers)?…

A: Sales Discount :- Sales discount is offered to debtors to encourage earlier settlement of debts by…

Q: Explain the methods of estimating bad debts ?

A: Bad Debt: A loan or outstanding sum that is no longer considered collectable and must be wiped off…

Q: If it is a deficit why should add AFN amount to cash and cash equivalents, not to debt? can you…

A: Deficit means the shortage. The asset equation is "Total assets = Total liabilities + Total equity".

Q: Describe the approches to estimates bad debts.

A: Definition: Bad debt expense: Bad debt expense is an expense account. The amount of loss incurred…

Q: What are some different methods that can be used for customer returns/bad debt?

A: Bad debts they are the expenses that are book by the company for the credit sales made by the…

Q: I. What are terms of credit? From the viewpoint of a…

A: The following concepts are answered below.

Q: Why is interest paid on amounts borrowed from banks and other lenders considered to be anoperating…

A: Cash Flow Statement: Cash Flow Statement is a fundamental financial statement that renders valuable…

Q: Under GAAP, companies are permitted to recognize bad debt expense based on estimated bad-debt losses…

A: The company makes cash as well as sales on account. The bad debt expenses represent the estimated…

Q: The only effect of a change in the investment of accounts receivable is the extra interest to be…

A: Company provide credits to customers and later recover the money from customers these are account…

Q: o methods of accounting for bad debts? Wh

A: 1.The direct write-off method 2. allowance method. In the direct write-off method, an allowance…

Q: What are some of the ways to estimate bad debts?

A: There are 2 basic methods namely 1. Percentage of sales method 2. Percentage of receivable method…

Q: Why would a corporation want to factor its receivables if it would only receive a fraction of the…

A: Introduction: Factoring is nothing more than discounting bills receivables before the due date to a…

Q: When an account is determined to be uncollectible, "writing off" the bad debt usually involves…

A: When the company sells the goods on credit it allows some credit period for the customers to pay off…

Q: A decrease in the allowance for doubtful debts would result in O a reduction in gross profit an…

A: Following is the answer to given question

Q: The payment of past debt by the entity will cause a decrease in asset due to the outflow of cash,…

A: Lets understand the basics. Debt is a liability which will needs to pay within certain future so it…

Q: What are the general rules for measuring gain or loss byboth creditor and debtor in a troubled-debt…

A: Rules for measuring gain or loss by creditor in a troubled-debt restructuring involving a…

Q: 2. Substantial amount of credit losses is due to poor loan monitoring. In view of this, suggest how…

A: Loan is when the funds are given to some other party in an exchange regarding the repayment of the…

Q: Discounting is a transfer or endorsement of a promissory note by the payee in favor of another party…

A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…

Q: What is the theoretical justification of the allowancemethod as contrasted with the direct write-off…

A: Determine the theoretical justification of the allowance method.

Q: We are currently working on Bad Debt expense and Receivables. Please see attachement.

A: Revised Journal Entry:

Q: How is the allowance method of accounting for bad debts different from the direct write-off method?…

A: Solution: Introduction: Allowance for Doubtful accounts is a contra asset, that it is related with…

Q: The advantage of relating the bad debt experience to accounts receivable is that this approach

A: There is a convention of conservatism or prudence, it is the policy of playing safe. According to…

Q: What is the asset-liability time mismatch that all banks face?

A: Assets: Assets are those items that provide value for money and future economic benefit for an…

Q: Describe the allowance method used to estimate bad debts and the theoretical justification for its…

A: The allowance method involves a process that records an estimate of bad debts that are expected in…

Q: Govenments are prevented from barrowing unlimited funds through the enforcement of debt limits.…

A: PLEASE LIKE THE ANSWER: Debt limit also known as debt ceiling; it is a limit on how much the…

Q: In your own opinion what would be the outcome or consequences if a debtor failed to settle thier…

A: A debt default happens when the borrower fails to pay the money back to the lender at the time when…

Q: When a firm writes bad debt under the allowance method of accounting for bad debts

A: A firm generally uses, allowance for bad debts method in accounting for bad debts if it can estimate…

Q: What will the company record for bad debt expense?

Q: What is meant by bad debts recovery? Give two illustrative example.

A: Bad debt refers to loans or outstanding balances owed that are no recoverable and must be written…

Q: What occurs when a business pledges its receivables?

Q: What is proovision for bad debts

A: Bad debt means the amount due from debtor but it become bad i.e. it is not possible to recover the…

Q: When the original terms of a debt agreement are changed because of financial difficulties…

Question

How would the transactions be reconciled if the allowance for bad debt is converted to a bad debt write off but the company is able to recoup the funds?

Definition Definition Receivable amount that a company is owed, but did not receive, and which may not be receivable in future.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Conclusion

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Which account type is used to record bad debt estimation and is a contra account to Accounts Receivable?
What is an earnings management benefit from showing an increased figure for bad debt expense?
Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance method
What is an earnings management benefit from showing a reduced figure for bad debt expense?
Explain why writing off a bad debt against a company's Allowance for Doubtful Accounts does not diminish the estimated realizable value of its accounts receivable.
Explain why writing off a bad debt against the Allowance for Doubtful Accounts does not reduce the estimated realizable value of a company’s accounts receivable.
Explain why writing off a bad debt against the Allowance for Doubtful Accounts does not diminish a company's accounts receivables' estimated realizable value.
Which of the following is NOT a reason for sales discounts to be offered to the debtors(customers)? A. Increase the amount paid by the debtors B. Improve the liquidity by turning the accounts receivable into cash C. Encourage earlier settlement of debts by debtors D. Reduce the level of bad debts
Which of the following is a reason that banks may favor fee compensation over balance compensation? Balance compensation is not as visible as fees for budgeting purposes. The strategy involves attracting deposits to fund their loans. Earning credits used to determine the value of collected balances are taxable. Deposit balances increase liabilities on the balance sheet.
In your own opinion what would be the outcome or consequences if a debtor failed to settle thier account?
refers to the possibility that the debtors supported by bank credit are unable or unwilling to repay the debts on time as stipulated in the contract for various reasons, causing losses to the bank. (A) Credit risk (B) Market risk (C) Operational risk (D) Liquidity risk
What are the different ways to estimate bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt? Explain your answer.