P1.A.2.1 Asset Valuation - Accounts Receivable

Question 1

Calculation of Allowance for Uncollectible Accounts

P1.A.2.1 Asset Valuation - Accounts Receivable

Answer 1

Allowance for uncollectable accounts required balance
+ Add: Accounts written off
- Less: Allowance for uncollected accounts beginning balance
= Equals: Bad debt expense for the period

Question 2

Valuation of Accounts Receivable

P1.A.2.1 Asset Valuation - Accounts Receivable

Answer 2

Gross accounts receivable ending balance
- Less: Allowance for returns
- Less: Allowance for uncollectible accounts
= Equals: Net realized value (NRV) of accounts receivables

Question 3

Factoring with Recourse

P1.A.2.1 Asset Valuation - Accounts Receivable

Answer 3

1. Guaranteed sale of accounts receivables
2. Seller recognizes recourse liability
3. NRV - holdback fee is added back

Question 4

Factoring without Recourse

P1.A.2.1 Asset Valuation - Accounts Receivable

Answer 4

1. Outright sale of accounts receivables

2. NRV - holdback fee is added back