A/R - Aging of Receivables Method Flashcards
1
Q
What is the aging of receivables method also known as?
A
The balance sheet method
2
Q
How does the aging of receivables method work?
A
The longer a receivable is outstanding, the less likely you are too receive the money
3
Q
What are the steps of the aging of receivables method?
A
1. Calculate percentages of all aging receivables
2. Update allowance t-account (beginning allowance - x = credited allowance)
3. Produce journal entry (debit bad debt expense, credit allowance)
4. Subtract allowance from total a/r value
