M3 - M2 - Trade Receivables Flashcards
Valuing accounts receivable requires reductions (4)
1) bad debts, 2) sales returns and 3) allowances, and 4) sales discounts
___________ balance is the approximating cash expected to be collected.
net accounts receivable
Sales and related receivables can be recorded using either the _______ method or the theoretically preferred ______method.
Gross method or net method
What is the JE to record a Receivable of $100 with a 1% discount at Gross method?
DR Receivable - $100 , CR Sales - $100
What is the JE to record a Receivable of $100 with a 1% discount at Net Method
DR Receivable - $99, CR $99
The ____ method records a sale without regards to the available discount, if payment is received with the discount period, a sales discount account is debited for the amount
Gross Method
Accounts receivable is presented on the balance sheet at the ____________.
net realizable value
Estimating uncollectible accounts receivables includes the following methods (2)
Direct Write-off Method and Allowance method
________ method: used for tax; it is not GAAP.
Direct Write-off Method
In the _________ approach (percent of ending A/R and aging method), the ending balance in the allowance account must equal an amount determined by an analysis of the A/R schedule.
balance sheet approach
In the allowance method, writing off an account receivable involves debiting the ______ and crediting ___________.
allowance, accounts receivable
When collecting an account previously written off, restore the _______ and the _______ and then record the collection in the normal way.
account receivable and allowance and DR Cash, CR AR
Factoring receivables can be done either (2)
with or without recourse.
_________ means the transferor retains the risk of uncollectibility.
With recourse
Factoring _______ is a sale of the receivable and the assignee assumes the risk of loss.
without recourse
