Uncollectible account

Uncollectible account

An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay.

Uncollectible Account

Accounts receivable that a company cannot collect because the client is unable or unwilling to pay. If the client is simply unwilling to pay, the company can sue to collect what is owed; however, this incurs its own expenses and may not be worth the effort. If the client is unable to pay, for instance because of bankruptcy, the company writes off the amount lost as bad debt. This reduces the company's revenue, but also reduces its taxable income.
References in periodicals archive ?
All those companies that have extended credit or services and have uncollectible accounts will now be able to recoup a portion of what's owed to them.
Gross Receipts shall mean those amounts of money which the franchisee receives from its customers for the retail sale and/or transportation of gas within the Franchise Area as adjusted for refunds, the net write-off of uncollectible accounts, corrections, or other adjustments.
The case focuses on fundamental changes to the revenue recognition model and potential changes to the timing and measurement of revenue and related transactions such as product or service warranties, merchandise returns, uncollectible accounts, and multiple deliverables.
The Association carries its accounts receivable at cost less an allowance for uncollectible accounts.
million provision for uncollectible accounts and $59 million in
Accordingly, it must report the amounts attributable to the allowance for uncollectible accounts receivable on line 32 (Bad debt expense), and must separately state and adequately disclose the amounts attributable to the reserve for pending litigation and the warranty reserve on line 35 (Other expense/deduction items with differences).
Allowances for uncollectible accounts that are not correlated with receivables;
Let's take the company earning 10% pre-tax return on annual sales of $1 million with a 5% uncollectible accounts rate and average A/R balance of $100,000.
Additionally, the company experienced an $850,000 loss related to the writeoff of uncollectible accounts receivable (primarily affecting three same store centers), the majority of which was attributable to a single contracting party having ceased business.
For example, when discussing accounts receivable, students should understand that an allowance for uncollectible accounts is estimated at year-end so that expenses are matched with the related revenues.
In general, the highest borrowing rates - typically on credit cards for those with subpar incomes or repayment histories - will be hit relatively lightly because they reflect more the lenders' cost of administration and write-offs of uncollectible accounts than the cost of money.
After calculating or reviewing the allowance for uncollectible accounts, the auditors were given new information (from either a client source or an independent credit agency) and asked to reconsider their original decision.