Tag Archives: general ledger
A Guide to Tracking Receivables: Reports maximizing the company’s financial potential – part 2
Receivables aging. This sort of report has two basic purposes. First, it allows managers to understand how old the receivables are; the older a receivable, the less likely it will be collected. Second, the report helps accountants calculate the amount of money to allow for uncollectible accounts. Customer balance tracking. In preserving the asset value [...]
How to Handle Bad-Debt Write-Offs: the early stages – part 2
When a receivable—such as back rent from Creative Lens Photography in the example used earlier—fails to materialize, you reduce your reserve for bad debts and ACCOUNTS RECEIVABLE, thus lowering both accounts. The transaction looks like this: Debit reserve for bad debts $4,000 Credit accounts receivable $4,000 Note “Write-off of Creative Lens back rent” The landlord [...]
How to Handle Bad-Debt Write-Offs: basics
Bad debts can result from many things, but they all boil down to one simple definition from an accounting point of view: bad debts are uncollectible amounts. In the end they are written off the books to keep the accounts in balance. No matter how well companies plan, how vigilant they are in verifying credit, [...]
How to Make Entries to the Accounts Receivable: Recording Returned Merchandise
In most cases, merchandise returns involve four steps. First, the merchandise is checked against the invoice, inspected, and marked to be put back on the shelves. Second, the amount to be credited is verified. Third, credit is given to the customer returning the merchandise. Fourth, the amount of the credit is posted to the customer’s [...]
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Recent Posts
- Credit informational asymmetries
- Adverse selection in a loan model
- Conditional credit expectation rule
- A credit discriminatory pricing rule
- Types of bank capital represent its own credit risk class
- Different degrees of loans subordination
- General fluctuations of credit spreads
- Investors require a premium for taking on credit risk
- Lagging indicators of credit quality
- Selection of your credit spread class
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