Lesson 10 Receivables

Question 1

What is the impact of a write off on Net income & Net Assets using the allowance method?

Answer 1

Both do not change

Entry decreases both accounts:
To write off a receivable

DR: Allowance for doubtful accounts
CR: AR

Since Net A/R = A/R- the allowance, since both are reduced by the same amount, Net A/R is not affected

Question 2

How will Notes Receivable be reported on the BS?

Answer 2

Face amount + interest for all years x present Value factor

Exception
If due within a year only use FACE value