8. Debits and Credits for Bank reconciliation and Bad Debts

Bank reconciliation, Bad Debts (Accounts Receivable)

Entry for EFT receipt of rent revenue

Debit Cash, Credit Rent Revenue

Entry for bank collection of note receivable, plus interest revenue

Debit Cash for full amount, Credit Notes Receivable for note amount, Credit Interest revenue for interest amount.

Entry for interest revenue from bank

Debit Cash, Credit Interest Revenue

Entry for correction of book error (check amount overstated)

Debit Cash for amount of overstated, Credit Accounts Payable for same amount.

Entry for bank service charge

Debit Miscellaneous Expense, Credit Cash

Entry for NSF check

Debit Accounts Receivable for amount on check, Credit Cash for amount on check

We basically reinstate the accounts receivable amount since the check was not good.

Entry for EFT payment of insurance expense

Debit Insurance expense, Credit Cash

Entry to record uncollectible accounts receivable (direct write-off method)

Debit Bad Debt Expense, Credit Accounts Receivable

Entry if bad debt is actually repaid (direct write-off method)

1. Reinstate accounts receivable: Debit Accounts Receivable, Credit Bad Debt Expense
   

2. Debit Cash, Credit Accounts Receivable

Entry to set up allowance for doubtful accounts (allowance method)

Debit Bad Debt Expense, Credit Allowance for doubtful accounts

If estimated based off sales multiply % by sales for the period. For example if sales were $100,000 and 2% of all credit sales were uncollectible. $100,00 x .02 = $2,000 uncollectible.

When a customer account is identified as being uncollectible(allowance method)

Debit Allowance for doubtful accounts, Credit Accounts Receivable

Entry when customer later pays (allowance method)

1. Debit Accounts Receivable, Credit Allowance for Doubtful Accounts

2. Debit Cash, Credit Accounts Receivable