a ledger that is used to manage detailed information that would be
difficult ti track in a general ledger account
subsidiary accounts are controlled by a single general ledger account
known as the control account
accounts receivable subsidiary ledgers
include t accounts that record transaction from different customers.
interest charge occur when customer does not pay in full within the
for example : SYCH Ltd. has a 3000 outstanding balance, and the interest
charge is 28 % eg. 3000*28%*1/12 =70
debit accounts receivable
credit interest revenue
Debit Bad Debts Expense
Credit Allowance for Doubtful Accounts (this is a contra asset)
allowance method- management estimates the uncollectible accounts at
the end of each period.
percentage of receivable outstanding: management estimates what
percentages of receivable is likely to be uncollectible - based on past
experience, with current economic climate factored
aging of accounts receivable method - stratifying receivables classifies them by
the length of time they have been outstanding.
- the longer the receivable is outstanding the higher the estimated
percentage of uncollectible debts
carrying amount of accounts receivable- is the amount at which receivable are
presented in the statement of financial position and reflected management's
estimated of the receivable that will ultimately be received.
Allowance for Doubtful accounts is normally a credit account
Bad debt expense - calculating the difference between the required balance and
unadjusted balance in the allowance account