Types of Receivables and How to Manage Accounts Receivable

ar= 324000 ada: 2200 debit Uncollectible: 18100 Receivables 1. Identify the types of receivables and record accounts receivable transactions. 2. Account for bad debts. 3. Account for notes receivable. 4. Explain the statement presentation of receivables. 5. Apply the principles of sound accounts receivable management. What is receivable? -Accounts receivable -Notes receivable, more formal, current or non current, one year vs 1+ year -Others (interests, loans to company officers, advances to employees, recoverable sales and income taxes) 1. Accounts receivable -A receivable is recorded when service is provided on account or at -point of sale of merchandise on account Receivables are reduced/ credited when -• Cash is collected. -• The customer takes advantage of a sales discount -• The customer returns the product. Receivables are increased/ debited: -if a customer does not pay in full within a specified period of time (usually 30 days), an interest (financing) charge may be added to the balance due (an increase to interest revenue). -Seller recognizes interest revenue and increases the account receivable balance owed by the customer Recognizing accounts receivables, if company have too many customers, there will be accounts receivables in subsidiary ledger -A subsidiary ledger is a ledger that is used to manage detailed information that would be difficult to track in a general ledger account -General ledger has total balance, but subsidiary has the each person who owes us If someone owes us money and and we charge them interest, we record the entry Accounts Receivable 696 Interest Revenue 696