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**Lesson Plan: Financial Accounting for Senior Secondary 2**
**Topic: Final Accounts - Special Transactions: Bad Debts, Closing Entries**
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**Objective:**
By the end of the lesson, students will be able to:
1. Understand the concept of bad debts in financial accounting.
2. Recognize and account for bad debts in the preparation of final accounts.
3. Execute closing entries for bad debts at the end of an accounting period.
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**Duration: 80 minutes**
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### 1. Introduction (10 minutes)
**Activity:**
- Begin with a brief review of the previous lesson (about the basic concepts of final accounts). Ask a few students to summarize key points.
**Discussion**:
- Introduce today’s topic with a brief explanation.
- **Bad Debts**: Accounts receivable that are not expected to be collected.
- **Closing Entries**: Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.
**Materials:**
- Whiteboard and markers
- Textbooks
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### 2. Explanation of Bad Debts (20 minutes)
**Activity:**
- Use the whiteboard to illustrate how accounts receivable can become bad debts.
**Discussion**:
1. Explain the causes of bad debts (e.g., customer insolvency, prolonged non-payment).
2. Describe the methods of recognizing bad debts:
- Direct write-off method
- Allowance method
**Example:**
- Present a real-world or hypothetical company facing bad debts, and how they would document and manage these entries.
**Materials:**
- Whiteboard and markers
- Example scenarios
- Accounting software or spreadsheets (optional)
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### 3. Accounting for Bad Debts (20 minutes)
**Activity:**
- Work through an example problem with the class, step-by-step.
**Discussion:**
1. Introduction of the direct write-off method:
- Entry: Debit Bad Debts Expense, Credit Accounts Receivable.
2. Introduction of the allowance method:
- Entry: Debit Bad Debts Expense, Credit Allowance for Doubtful Accounts.
**Practice:**
- Have students work in pairs to solve a set of problems provided on a worksheet. They will journalize transactions related to bad debts using both methods.
**Materials:**
- Worksheets with practice problems
- Pencils and erasers
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### 4. Closing Entries for Bad Debts (20 minutes)
**Activity:**
- Explain the purpose of closing entries in accounting, focusing on closing entries for temporary accounts related to Bad Debts.
**Discussion:**
1. Describe the process of closing entries:
- Closing revenue accounts to Income Summary
- Closing expense accounts, including Bad Debts Expense, to Income Summary
**Demonstration:**
- Walk through an example on the whiteboard showing closing entries at the year-end including bad debts.
**Materials:**
- Whiteboard and markers
- Accounting software or spreadsheets (optional)
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### 5. Class Exercise and Review (10 minutes)
**Activity:**
- Provide students with a brief in-class exercise to complete individually. These should cover identifying bad debts, processing bad debts entries, and preparing closing entries.
**Review:**
- Go over the answers with the class, providing feedback and clarification as needed.
**Materials:**
- In-class exercise sheets
- Writing instruments
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### 6. Conclusion (10 minutes)
**Activity:**
- Recap the day's lesson, highlighting key concepts of bad debts and closing entries.
**Discussion:**
- Answer any remaining questions from students.
- Discuss the importance of accurate accounting for bad debts and closing entries in financial statements.
**Assignment:**
- Assign homework: Students should find and summarize a real-world case from a company’s financial report where bad debts were reported and how they were handled.
**Materials:**
- Assignment guidelines
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**Assessment:**
- Evaluate students based on class participation, completion and accuracy of the in-class exercises, and the quality of their homework assignment.
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**Resources:**
- Textbook chapters covering final accounts, bad debts, and closing entries.
- Accounting software tutorials (if applicable).
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### Notes for Instructors
- Adjust the duration of each section based on classroom dynamics and the pace at which students grasp the concepts.
- Use real-life examples as much as possible to make the content relatable and easier to understand.
- Encourage students to ask questions throughout the lesson to maintain engagement and ensure understanding.
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## End of Lesson Plan