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ACCOUNTING FOR
RECEIVABLES
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Winston Kwok, Ph.D., CPA
Copyright2011byTheMcGrawHillCompanies,Inc.Allrightsreserved.
9- 2
C1
ACCOUNTS RECEIVABLE
A receivable is an amount due from another party.
C1
SALES ON CREDIT
C1
SALES ON CREDIT
9- 5
C1
C1
C1
C1 INSTALLMENT ACCOUNTS
RECEIVABLE
Amounts owed by customers from credit
sales for which payment is required in
periodic amounts over an extended time
period. The customer is usually charged
interest.
P1
P1
P1
DIRECT WRITE-OFF METHOD
RECOVERING A BAD DEBT
P1
P1
ALLOWANCE METHOD
At the end of each period, estimate total bad
debts expected to be realized from that periods
sales.
P1
P1
P1
P1
P1
P2
Accounts
Accounts Receivable
Receivable Methods
Methods
Percent
Percent of
of Accounts
Accounts Receivable
Receivable
Aging
Aging of
of Accounts
Accounts Receivable
Receivable
9- 20
P2
P2
P2
Classify
Classifyeach
eachreceivable
receivableby
byhow
how
long
longititis
ispast
pastdue.
due.
Each
Eachage
agegroup
groupis
ismultiplied
multiplied by
byits
its
estimated
estimatedbad
baddebts
debtspercentage.
percentage.
Estimated
Estimatedbad
baddebts
debtsfor
foreach
eachgroup
group
are
aretotaled.
totaled.
9- 23
P2
P2
P2
SUMMARY OF METHODS
9- 26
C2
NOTES RECEIVABLE
A promissory note is a written promise to pay a specified
amount of money, usually with interest, either on
demand or at a definite future date.
9- 27
C2
INTEREST COMPUTATION
Even
Even for
for IfIf the
the note
note is
is
maturities
maturities less
less expressed
expressed in in
than
than one
one year,
year, days,
days, base
base aa
the
the rate
rate is
is year
year onon 360
360
annualized.
annualized. days.
days.
9- 29
C2
P3
P3
P3 RECORDING END-OF-PERIOD
INTEREST ADJUSTMENTS
P3 RECORDING END-OF-PERIOD
INTEREST ADJUSTMENTS
END OF CHAPTER 9