JE for Bad Debt using direct write off method
Bad Debt expense — Dr
Sales Tax. — Dr
AR — Cr
appropriate for small immaterial amounts
Methods of Recording bad debt
direct write-off method
allowance method
Bad Debt JE - Allowance Method
Estimate Uncollectible Receivable
Bad Debt Expense - Dr
Allowance for Doubtful Accounts - Cr
Write off Account
Allowance for Doubtful Accounts — Dr
AR — Cr
Two methods used in estimating bad debt expense
Percentage of sales
Percentage of receivables
IRS Form 8109: Federal Tax Deposit (FTD) Coupon
can be used to deposit many different kinds of federal payments including
Form 941: Employer’s Quarterly Federal Tax Return (includes federal withholding taxes, Social Security taxes, and Medicare taxes)
Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 1120: US Corporation Income Tax Return
Cost basis equation
Cost of fixed asset + sales tax + Shipping and delivery costs + Installation charges + Other costs = cost basis
Depreciation Methods
Straight line
declining balance
sum of years digits
units of production
Depletion is
Annual expense for the use of natural resources.
Based on actual physical usage.
Ex: oil, timber and minerals
Salvage Value
Estimate that management makes for how much the fixed asset will be worth when it’s retired.
Depreciable base
Dollar amount you use to compute depreciation.
Double declining balance method
Depreciation method ideal for assets whose primary usefulness is in the early years of life.
Double declining balance formula
2 x (1/Estimated useful life) x Book value at the beginning of the year = Depreciation Expense
IRS Methods for writing off assets (depreciation methods)
straight line
section 179
MACRS
Section 179
Tangible property such as machines, equipment and furniture.
Some storage facilities qualify.
Cars and SUVs between 6000 and 14000 pounds can be partially written off.
