Journal Entries for Receivables

Reporting and Analyzing Receivables Journal Entries for Accounts Receivables Write-off: Journal Entry Account Title

Transaction Description

Debit

Direct write-off method

Bad Debt Expense Accounts Accounts Receivable

XXX

To record estimated uncollectible accounts at the beginning of each year.

Bad Debt Expense Allowance Allowance for Doubtful Accounts

XXX

To record the write-off of an uncollectible account using the allowance method for accounting for receivables

Allowance Allowance for Doubtful Accounts Accounts Accounts Receivable-clients name

XXX

Accounts Accounts Receivable-clients name Allowance Allowance for Doubtful Accounts

XXX

Cash

XXX

To record the recovery of an uncollectible account that has already been written off earlier in the accounting period

Credit

XXX

XXX

XXX

XXX

Accounts Accounts Receivable-clients name XXX The Direct write-off method is not GAAP approved because it fails to match expense with the revenues in the period in which they are incurred. The allowance method is derived from an aging of  the accounts receivable to determine the dollar amount of accounts receivable, which will go bad in any given fiscal period.

Journal Entries for Notes Receivables: Journal Entry

Transaction Description

To record the making of a notes receivable for sale of merchandise

Account Title

 Notes Receivable

MJC Revised 10-2011

Credit

XXX

Sales Revenue

 Notes Receivable To record the making of a notes receivable in exchange for a accounts receivable Accounts Receivable To record the honoring (payment) of a notes receivable at the date of maturity when no interest has been accrued

Debit

Cash

XXX XXX XXX XXX

 Notes Receivable

XXX

Interest Revenue

XXX

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Reporting and Analyzing Receivables Journal Entries for Notes Receivables continued: Journal Entry Account Title

Transaction Description

To record the honoring (payment) of a notes receivable at the date o f maturity when interest has been  partially accrued To record the honoring (payment) of a notes receivable at the date o f maturity when interest has been fully accrued

Debit

Cash

Credit

XXX   Notes Receivable Interest Receivable Interest Revenue

Cash

XXX XXX XXX XXX

  Notes Receivable Interest Receivable

Interest Receivable To record accrual of interest on a notes receivable at the end of a fiscal period but before the maturity date. Interest Revenue

XXX XXX XXX XXX

To record the dishonoring (non-payment) of a notes receivable when it is possible that the custo mer will  be able to repay the loan at a future date.

Accounts Receivable XXX   Notes Receivable Interest Receivable

To record the dishonoring (non-payment) of a notes receivable when there is no hope of recovery in the future.

Allowance of Doubtful Accounts XXX   Notes Receivable Interest Receivable

XXX XXX

XXX XXX

Journal Entries for Credit Card Sales and Factoring of Receivables: Transaction Description

Journal Entry Account Title

Debit

Credit

To record the sale of o f merchandise on credit using a national credit card such as Visa or MasterCard

Cash Service Charge Expense Sales Revenue

XXX XXX

To record the sale of receivables to a factor to  provide a quick return of cash to the company

Cash Service Charge Expense Accounts Receivable

XXX XXX

MJC Revised 10-2011

XXX

XXX

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