Dear John I appreciate both the accounting material that you cover and your presentation style. I am uncertain about the debt of $2,200 that was subsequently recovered from Paul. At 10:30 in the video, is it the case that you debit Receivables by $2,200 to compensate for the credit to Receivables of $3,000 in the previous year. In other words, you record a debit in Receivables to clear up a previous credit entry (the write off of $3,000). I guess I am asking you a question and trying to clarify my own thinking at the same time. Thanks Jim Coen
Please ask your question in the Ask the Tutor Forum on our free website. Our tutors do not monitor posts on TH-cam, but always answer questions posted in our free Ask the Tutor Forums.
I think you were duplicated the irrecoverable expense because the last year when we recognized that George owing debt were doubtful. and recorded as doubtful expense Dr. and Allowance for receivable CR. into 8000 after the next year the debt became irrecoverable why we duplicate the expense while we recognized in last year and decrease our profit due to debt became doubtful. I think it good to record Allowance for receivable Dr. and Account Receivable CR to remove account receivable amount to be irrecoverable.
No it is not duplicated. The change in the allowance is lower than it would otherwise be. You can achieve the same result in more than one way (and it is only the end result that matters for the exam) but the method that I show is the most efficient method for the exam (and the most common method used in practice).
In 12:07, You show the payment made from a doubtful client ( Anna) would be recorded as normal payment Dr Cash and Cr Receivables. Still, when I studied from KAPLAN, it demonstrated in this example to Dr Irrecoverable debts expense and Cr Allowance for receivables. Is it because the recording for allowance for receivables was made a different way in the first place? Where is my error of thinking ?
In future it is better to ask questions in our free Ask the Tutor Forums on our website, because we do not always monitor questions here but always answer questions on our Ask the Tutor Forums within 24 hours. Because Anna was only a doubtful debt, then the receivable would still be showing as part of the total on the receivables account. Therefore when the cash is received we must debit cash and credit receivables because the amount is then no longer owing. There is no alternative to this. At the same time, and separately, the allowance is no longer needed because there is no longer any debt owing. This can be dealt with in two ways (and I do explain this in the lecture). You can either cancel the allowance in the way you have quoted from Kaplan, or alternatively (and much quicker and easier) you can simply calculate the new allowance required (which will no longer include Anna) and adjust the allowance brought forward. Both ways end up with the same result, but again the way I show in the lecture is much the better way in the exam (as well as in real life).
@@opentuition, I appreciate you taking the time to explain my question. I'll follow your advice and post any future questions on the Forum. Again Thank you.
Hello, Why 12,560USD as a sum of Allowance 4% and doubtful receivables of George and Ann from (8000USD, respectively 2000USD) of the example number 2 was deducted from the allowances of 9,248USD from the 3rd example to give us 3312USD? I am sorry for my ignorance, I find it a bit complicated to understand this part. Hoping in your channel's or someone else's reply. Cheers!
Hi, The 12560 was the balance for the allowance that he had made from last years receivables figures. This years allowance was 9,248 (the specific allowance of $6,000 and 4% of 87,200 - 6000) So he had to reduce the allowance for doubtful debts balance of 12,560 to match his current years allowance. (12,560 - 9,248 = the amount he had to change the balance by to get the current years allowance) If he didn't do so, he would be misstating this years current assets figure. He has calculated 9,248 but the account would show 12,560 if he hadn't changed it. I'm not sure if that's what you asked, I couldn't understand your Q properly. If you make it clearer I can try to help you.
@@unknxwnxdany8714 Can I ask why the allowance can be reduced in this way? It that bcuz of policy or what? I’m So confused why such allowance can be adjusted yearly.
@@snowblack148 allowance are calculated based on receivables figures, with a new receivable figures now (year 2001, instead of previous year 2000), we have to calculate the new allowance again for year 2001. It is reduced this way so that the allowance figure change to become updated figures.
Really good guidance on a pretty difficult question, thanks
i will always continue to watch both the ads for you John.
''WE THOUGHT HE WAS DEAD'' !!!! HAHAHAHAHA amazing sir.
good guidance on a difficult question/ thank you ser
The official courses didn't go into this depth ,
even though im a bit lost,
but i find helpful .
Same here, I’m a bit lost. But the technique he uses to teach is helpful for MCQ.
Very helpful! Thanks
Thank you for the lecture!
thank you so much sir .....💗
thanks for the explanation!
Dear John
I appreciate both the accounting material that you cover and your presentation style.
I am uncertain about the debt of $2,200 that was subsequently recovered from Paul. At 10:30 in the video, is it the case that you debit Receivables by $2,200 to compensate for the credit to Receivables of $3,000 in the previous year. In other words, you record a debit in Receivables to clear up a previous credit entry (the write off of $3,000).
I guess I am asking you a question and trying to clarify my own thinking at the same time.
Thanks
Jim Coen
Please ask your question in the Ask the Tutor Forum on our free website. Our tutors do not monitor posts on TH-cam, but always answer questions posted in our free Ask the Tutor Forums.
Could you please show T entry for Ann's sudden payment
I think you were duplicated the irrecoverable expense because the last year when we recognized that George owing debt were doubtful. and recorded as doubtful expense Dr. and Allowance for receivable CR. into 8000 after the next year the debt became irrecoverable why we duplicate the expense while we recognized in last year and decrease our profit due to debt became doubtful.
I think it good to record Allowance for receivable Dr. and Account Receivable CR to remove account receivable amount to be irrecoverable.
No it is not duplicated. The change in the allowance is lower than it would otherwise be. You can achieve the same result in more than one way (and it is only the end result that matters for the exam) but the method that I show is the most efficient method for the exam (and the most common method used in practice).
@@opentuition thank you very much Lecturer. I get it, may be the methods were different.
In 12:07, You show the payment made from a doubtful client ( Anna) would be recorded as normal payment Dr Cash and Cr Receivables. Still, when I studied from KAPLAN, it demonstrated in this example to Dr Irrecoverable debts expense and Cr Allowance for receivables. Is it because the recording for allowance for receivables was made a different way in the first place? Where is my error of thinking ?
In future it is better to ask questions in our free Ask the Tutor Forums on our website, because we do not always monitor questions here but always answer questions on our Ask the Tutor Forums within 24 hours.
Because Anna was only a doubtful debt, then the receivable would still be showing as part of the total on the receivables account. Therefore when the cash is received we must debit cash and credit receivables because the amount is then no longer owing. There is no alternative to this.
At the same time, and separately, the allowance is no longer needed because there is no longer any debt owing. This can be dealt with in two ways (and I do explain this in the lecture). You can either cancel the allowance in the way you have quoted from Kaplan, or alternatively (and much quicker and easier) you can simply calculate the new allowance required (which will no longer include Anna) and adjust the allowance brought forward. Both ways end up with the same result, but again the way I show in the lecture is much the better way in the exam (as well as in real life).
@@opentuition, I appreciate you taking the time to explain my question. I'll follow your advice and post any future questions on the Forum. Again Thank you.
Hello,
Why 12,560USD as a sum of Allowance 4% and doubtful receivables of George and Ann from (8000USD, respectively 2000USD) of the example number 2 was deducted from the allowances of 9,248USD from the 3rd example to give us 3312USD? I am sorry for my ignorance, I find it a bit complicated to understand this part. Hoping in your channel's or someone else's reply. Cheers!
Hi,
The 12560 was the balance for the allowance that he had made from last years receivables figures.
This years allowance was 9,248 (the specific allowance of $6,000 and 4% of 87,200 - 6000)
So he had to reduce the allowance for doubtful debts balance of 12,560 to match his current years allowance. (12,560 - 9,248 = the amount he had to change the balance by to get the current years allowance)
If he didn't do so, he would be misstating this years current assets figure. He has calculated 9,248 but the account would show 12,560 if he hadn't changed it.
I'm not sure if that's what you asked, I couldn't understand your Q properly.
If you make it clearer I can try to help you.
@@unknxwnxdany8714 Can I ask why the allowance can be reduced in this way? It that bcuz of policy or what? I’m So confused why such allowance can be adjusted yearly.
@@snowblack148 allowance are calculated based on receivables figures, with a new receivable figures now (year 2001, instead of previous year 2000), we have to calculate the new allowance again for year 2001. It is reduced this way so that the allowance figure change to become updated figures.