BUS–A 201 at Indiana University--Bloomington


1 A/R and Bad Debts Introduction
An introduction to Accounts Receivable and Bad Debts, and why we have to recognize bad debts.
2 Direct Method
The Direct Method of accounting for bad debts is not used very often, and is super easy. We won't spend too much time here.
3 The Allowance Method
The Allowance Method is where we spend most of our time when accounting for bad debts. Under the allowance method, we have two more methods: The Income Statement Method and the Balance Sheet Method. Here, we simply introduce the allowance method.
4 Income Statement vs Balance Sheet Methods
Under tha Allowance Method of accounting for bad debts, we have two ways of coming up with our estimates: The Income Statement method and the Balance Sheet method. In this video, I'll show you how to remember which is which.
5 Net Credit Sales
When you're using the Income Statement method, you calculate your Bad Debt Expense off of Net Credit Sales. Remember how to do Net Credit Sales?
6 Write Offs and Reinstatements
At some point, you'll have to write off an account, but it's ok, because you have an allowance for that sort of thing.