Receivables Flashcards
G5
1
Q
Trade Receivables can be either a
A
AR and Note Receivables
2
Q
AR Net Realizable value is
A
Gross AR minus Allowance for Doubtful Account
3
Q
What is ending ADA
A
Ending ADA=Beg ADA
+ Bad Debt Expense
- Write-offs
+ Recoveries
4
Q
What is ending AR?
A
Ending AR=
Beg AR
+ Credit Sales
- Cash collections
- write-offs
-Conversion to notes
5
Q
What are the step to discount a Note Receivable?
A
- Determine the Maturity value of the note
- Determine the Discount amount
- Determine the cash Received
- Determine the interest income(expense)
6
Q
How do we determine the maturity value of a note to discount?
A
Face value of note + Interest to collect
7
Q
How do we determine the discount amount of a note?
A
we take the maturity value of the note * discount rate(pro-rated)
8
Q
How do we determine the cash received after the discount of a note?
A
Maturity value of the note - discount amount
