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Chapter 8: Accounting for receivables - Coggle Diagram
Chapter 8: Accounting for receivables
II. How value accounts receivable
Valuation of AR
By net realizable value (NRV) - the amount they believe they will actually collect
NRV = Accounts receivables - Allowance for doubtful accounts (phần ước tính không thu được)
Uncollectible AR
Definition: AR that cannot be collected
Record: Bad Debt Expense
How to record
Direct Write-off method
Limitation: Doesn't match bad debt expense to sales revenue
Not acceptable for financial reporting
How: debit Bad debt expense, credit accounts receivables
Allowance method (Dự phòng)
How: estimate uncollectible accounts at the end of each period
Benefit: Match expenses with revenues
Recording estimated uncollectibles: Debit bad debt expense, credit allowance for Doubtful accounts
Recording write-off uncollectibles: Debit allowance for doubtful accounts, credit AR
Recording recovery uncollectibles:
Debit AR, credit Allowance for doubtful accounts
Debit cash, credit AR
Estimate the Allowance
Percentage-of-receivables Basis
Disposing of AR
I. Recognize accounts receivables
Recognition
Claims that are expected to be collected in cash
Amounts due from individuals and companies
Types of receivables
Accounts receivables: tiền khách hàng còn nợ do doanh nghiệp đã bán hàng hoặc cung cấp dịch vụ nhưng chưa thu tiền
Notes receivables: khoản nợ có promissory note, cam kết trả 1 số tiền cụ thể vào thời điểm xác định, có lãi
Other receivables: Nontrade receivables: interest, loans, advances to employees, income taxes refundable
How to recognizing
Merchandiser: at point of sale of merchandise on account
Service organization: finish performing service on account