Methods for Accounting of Uncollectible Accounts

Q1. What are the various methods for Accounting of Uncollectible Accounts? Explain each method with suitable examples.

Sample Solution

Methods for Accounting of Uncollectible Accounts

Because customers do not always keep their promises to pay, companies must provide for these uncollectible accounts in their records. Two methods are used in accounting for uncollectible accounts: the Direct Write-off Method and the Allowance Method. The direct write-off method involves charging bad debts to expense only when individual invoices have been identified as uncollectible. The specific action used to write off an account receivable under this method with accounting software is to create a credit memo for the customer in question, which offsets the amount of the bad debt. Creating the credit memo creates a debit to a bad expense account and a credit to the accounts receivable account. The allowance method involves setting aside a reserve for bad debts that are expected in the future. When a specific bad debt is identified, the allowance for doubtful accounts is debited (which reduces the reserve) and the accounts receivable account is credited (which reduces the receivable asset).

The study of Barbieri & Sotomayor has found the strong implication of serious leisure qualities in surf tourism. It also proved how the serious leisure qualities do not have an effect surf travel behavior but it is significantly consociated with the preferences on the appeal of a surfing destination, thus influencing the decision of surf travellers or tourists in their willingness to go on a surf trip and in choosing a surfing destination.
Serious leisure can be distinguished in six qualities (Stebbins, 2007). The six qualities are what motivate someone in pursuing an activity. The six distinctive qualities are: persevere, effort, career, ethos, and identity. With the knowledge of a tourist’s motivation in their pursuit, knowing how to satisfy their needs and comply with their wants can be easily achieved.

Conceptual Framework
This encompasses the desired outcome of the study, which is to make San Juan, La Union a priority choice in the Philippines. This also elucidates the necessary measures to be conducted to achieve the coveted output and the possible threats through the utilization of the assessment and implications with the economic index indicators in acquiescence with the serious leisure qualities.

Figure 3: Conceptual Framework
The number of tourists visiting a surfing destination is the keystone to ascertain whether the place is the priority choice surfing destination or not. A tourist’s decision in opting for a certain destination is dependent to their leisure qualities which influences their preference in a surfing destination (Barbieri & Sotomayor, 2013). A leisure quality is the stimuli and their surf-related decision-making is the action. Whereas, the economic index indicators are what makes up a surfing destination. It characterizes what can be found and seen within the place. In a simplified exegesis, the indicators are what would satisfy or heed the leisure quality.

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