Transcript General Ledger

Accounting 3
Chapter 20
Section 2
Journalizing Writing Off an
Uncollectible Account Receivable
When a customer account is determined
to be uncollectible, a journal entry is made
to cancel the uncollectible account.
This entry cancels the uncollectible
amount from the General Ledger account
Accounts Receivable as well as the
customer account in the Accounts
Receivable Ledger.
Journalizing Writing Off an
Uncollectible Account Receivable
The accounts affected in this entry are:
Allowance for Uncollectible Accounts (because
this is an account just for money we assume we
are not going to receive, once we know that we
are definitely not going to receive it, the amount
must be deducted from this account) Accounts
Receivable and the customer account.
To journalize, you will debit AUA in order to
decrease it and credit AR and the customer
account in order to decrease as well.
Example transaction and visual steps on next
slide.
January 3. Wrote off Ryan Recreation’s past-due account
as uncollectible, $462.00. Memorandum No. 2.
General Journal
Date
Account Title
3
Allowance for Uncollectible Accts
Accts Rec / Ryan Recreation
Doc.
Post
No.
Ref.
M2
Page 18
___
Debit
4
Credit
6 2 00
4 6 2 00
Posting an Entry to Write Off an
Uncollectible Account Receivable
Posting this type of transaction is not any
different than what we have learned already
except for the customer account in the Accounts
Receivable Ledger.
When you get to this account, you are going to
write Written Off in the Item portion of the
account (yes we finally learn what this spot is
for)
A visual presentation for this portion of the
posting on next slide.
Posting to cancel a Written Off account in the
Accounts Receivable Ledger
Customer
Date
Apr
Ryan Recreation
Item
6
Jan 3
Post
Ref
S12
Written Off
G18
Cust No.
Debit
Credit
4 6 2 00
180
Debit
Balance
4 6 2 00
4 6 2 00
Because January is a new year,
you would need to add 2007
above January in the Date
column.
*In the computerized accounting, you would not do the written off comment.
It is not shown on our software.
Reopening an Account Previously
Written Off
In some cases, customers are able to pay off their debt
after their account has already been written off.
The first step in reinstating the account is to “re-enter”
the monies into all accounts affected. If we do not “reenter” the monies into the correct accounts, then our
totals in other accounts will not be accurate.
AR will be increased along with the customer account by
a debit.
AUA will be increased by a credit.
Example transaction and visual steps on next slide.
January 29. Received cash in full payment of Ryan Recreation’s
account, previously written off as uncollectible, $462.00. Memorandum
No. 3 and Receipt No. 8.
General Journal
Date
Account Title
29 Accts Rec / Ryan Recreation
Allowance for Uncollectible Accts
Doc.
Post
No.
Ref.
M3
18
Page ___
Debit
4
Credit
6 2 00
4
6 2 00
Recording Cash Received for an
Account Previously Written Off
After the entry to reopen a customer’s
account is recorded in the General Ledger,
the second step is to record the cash
received on that account in the Cash
Receipts Journal.
This entry is done as any cash receipt
transaction would be.
Visual steps on next slide.
Cash Receipts Journal
Date
Account Title
Jan 29 Ryan Recreation
Doc
Post
No.
Ref.
R8
GENERAL
DEBIT
CREDIT
51
Page ___
Accts Rec.
Credit
462.00
Sales
Credit
Sales Tax Payable
Debit
Credit
Sales Dis.
Debit
Cash
Debit
462.00
Posting Entries for Collecting a
Written-Off Account Receivable
Because this entry involved two journals, we must do a
multiple-step posting.
The first is to post from the General Journal. This is not
any different than what we have learned before until we
get to the customer account.
When you get to the customer account, you must write
Reopen account in the item space (yes, we get to use it
again).
The second step is to post from the Cash Receipts
Journal. The only thing to post from it is the Accounts
Receivable credit to show the customer paid off what
was owed.
Steps will be demonstrated in the Work Together
problem.
Work Together p. 536
General Journal on this slide,
Cash Receipts Journal on next slide.
General Journal
Date
Jun
Account Title
3
Allowance for Uncollectible Accts
Doc.
Post
No.
Ref.
M14
1130
6
Page ___
Debit
3 9
Credit
6 00
Accts Rec / Kelton Corporation
12 Allowance for Uncollectible Accts
M18
1130
5 7
M19
Allowance for Uncollectible Accts
5 7
9 6 00
5
7 5 00
5
7 1 00
5 00
Accts Rec / Matlin Company
13 Accts Rec / Marris, Inc.
3
1 00
1130
CRJ
25 Allowance for Uncollectible Accts
M23
1130
8 1 9 00
Accts Rec / Johnston, Inc.
30 Accts Rec / Kelton Corporation
Allowance for Uncollectible Accts
8 1
M27
9 00
3 9 6 00
1130
3
CRJ
CRJ=Cash Receipts Journal. This is hyperlinked so that you can look
right after the GJ journalizing or you can wait until you are completely
finished with the GJ and then go to the CRJ.
9 6 00
Cash Receipts Journal
Date
Jun 13
Account Title
Marris, Inc.
30 Kelton Corp.
GENERAL
9
Page ___
Doc
Post
No.
Ref.
R134
130
571.00
571.00
R152
120
396.00
396.00
DEBIT
CREDIT
Accts Rec.
Credit
Sales
Credit
Sales Tax Payable
Debit
Credit
Assignmen
t
Sales Dis.
Debit
Cash
Debit
General Ledger
Account
Date
Jun
Accounts Receivable
Item
1
Post
Ref
Acct No.
Debit
Credit
Balance
BALANCE
DEBIT
CREDIT
62 4 5 8 00
3
G6
3 9 6 00
62 0 6 2 00
12
G6
5 7 5 00
61 4 8 7 00
13
G6
25
G6
30
G6
Account
Date
Jun 1
5 7 1 00
62 0 5 8 00
8 1 9 00
3 9 6 00
61 2 3 9 00
61 6 3 5 00
Allowance for Uncollectible Accounts
Item
1125
Post
Ref
Debit
Credit
Balance
Acct No.
1130
BALANCE
DEBIT
CREDIT
8 4 5 8 00
3
G6
3 9 6 00
8 0 6 2 00
12
G6
5 7 5 00
7 4 8 7 00
13
G6
25
G6
30
G6
5 7 1 00
8 1 9 00
8 0 5 8 00
7 2 3 9 00
3 9 6 00
7 6 3 5 00
Accounts Receivable Ledger
Customer
Date
Johnston, Inc.
Item
Jan 5
Jun 25
Customer
Date
Written Off
Ref
Debit
Post
Ref
S3
Written Off
30 Reopen Account
8 1 9 00
8 1 9 00
Cust No.
Debit
CR9
Credit
120
Debit
Balance
3 9 6 00
G6
G6
Balance
8 1 9 00
G6
110
Debit
Credit
Kelton Corporation
Mar 2
30
Post
S1
Item
Jun 3
Cust No.
3 9 6 00
3 9 6 00
3 9 6 00
3 9 6 00
3 9 6 00
Click on CR9 hyperlink to get back to Cash Receipts Journal
Accounts Receivable Ledger
Customer
Date
Cust No.
Marris, Inc.
Item
Post
Ref
Feb 14
Written Off
G2
Jun 13
Reopen Account
G6
13
Customer
Date
Debit
Ref
Mar 4
S3
Jun 12 Written Off
G6
Balance
5 7 1 00
5 7 1 00
5 7 1 00
Cust No.
Matlin Company
Post
Debit
Credit
5 7 1 00
CR9
Item
130
Debit
Credit
5 7 5 00
140
Debit
Balance
5 7 5 00
5 7 5 00
Assignment
Do Application 20-2 and 20-3 by hand.
Turn it into Mrs. Middleton.
Do Mastery 20-4 with Automated Accounting
software. Print off all the general and cash
receipts journal before you do the adjusting
entry. Once you have finished the adjusting entry
print the general journal for just 12-31-07. Print
the general and accounts receivable ledgers.
Turn it into Mrs. Middleton.
Move on to Chapter 21.