aging the accounts receivable

Examples of aging the accounts receivable in the following topics:

• Reporting Receivables

  • Accounts receivable are reported as a line item on the balance sheet and in a more detailed again report.
  • Accounts receivable are reported as a line item on the balance sheet.
  • Supplementary reports, such as the accounts receivable aging report, provide further detail.
  • An accounts receivable aging report summarizes receivables based on their age—how long they have been outstanding.
  • The accounts receivable age analysis, also known as the Debtors Book, is divided into categories for current, 30 days, 60 days, 90 days, 120 days, 150 days, 180 days, and overdue that are produced in modern accounting systems.

• Classifying Receivables

  • Receivables can be classified as accounts receivables, trade debtors, bills receivable, and other receivables.
  • Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit.
  • Accounts receivable is the money owed to that company by entities outside of the company.
  • The allowance for bad debts can be calculated either as the percentage of net credit sales or by the ageing method of estimating bad debts.
  • Accounts receivable therefore can be classified according to their age.

• Collecting Receivables

  • Collecting upon accounts receivable is the final step in the credit extension process, and arguably the most difficult.
  • Accounts receivable days and an aging schedule are the most common monitor tools used.
  • The accounts receivable days is the average number of days that it takes a firm to collect on its sales.
  • The other method commonly used is an aging schedule which categorizes accounts by the number of days they have been on the books.
  • It can be constructed in one of two ways: using the number of accounts or using the dollar amount of the outstanding accounts receivable.

• Types of Receivables

  • Receivables can generally be classified as accounts receivables or notes receivable, though there are other types of receivables as well.
  • Other receivables can be divided according to whether they are expected to be received within the current accounting period or 12 months (current receivables), or received greater than 12 months ( non-current receivables).
  • Accounts receivable are amounts that customers owe the company for normal credit purchases .
  • Since accounts receivable are generally collected within two months of the sale, they are considered a current asset.
  • For example, interest revenue from notes or other interest-bearing assets is accrued at the end of each accounting period and placed in an account named interest receivable.

• Valuing Accounts Receivable

  • Recognizing the bad debt requires a journal entry that increases a bad debts expense account and decreases accounts receivable.
  • The adjusting entry to estimate the expected value of bad debts does not reduce accounts receivable directly.
  • Accounts receivable is a control account that must have the same balance as the combined balance of every individual account in the accounts receivable subsidiary ledger.
  • Since the specific customer accounts that will become uncollectible are not yet known when the adjusting entry is made, a contra-asset account named allowance for bad debts, which is sometimes called allowance for doubtful accounts, is subtracted from accounts receivable to show the net realizable value of accounts receivable on the balance sheet.
  • Differentiate between the direct write-off method and the allowance method of accounts receivable valuation

• Recognizing Notes Receivable

  • Accrued assets are assets, such as interest receivable or accounts receivable, that have not been recorded by the end of an accounting period.
  • When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry.
  • The ending balance on the trial balance sheet for accounts receivable is usually a debit.
  • Companies have two methods available to them for measuring the net value of accounts receivable, which is generally computed by subtracting the balance of an allowance account from the accounts receivable account.
  • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.

• Activities to Manage Receivables

  • Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit.
  • The accounts receivable departments use the sales ledger.
  • When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry.
  • The ending balance on the trial balance sheet for accounts receivable is usually a debit .
  • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.

• Write-Offs

  • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.
  • The credit is to the Accounts Receivable control account in the general ledger and to the customer's account in the accounts receivable subsidiary ledger.
  • Debiting the allowance account and crediting Accounts Receivable shows that the firm has identified Smith's account as uncollectible.
  • A write-off does not affect the net realizable value of accounts receivable.
  • For example, suppose that Amos Company has total accounts receivable of USD 50,000 and an allowance of USD 3,000 before the previous entry; the net realizable value of the accounts receivable is USD 47,000.

• Defining Accounts Receivable

  • Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit.
  • Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit.
  • The accounts receivable departments use the sales ledger, which normally records:
  • Companies have two methods available to them for measuring the net value of accounts receivable, which is generally computed by subtracting the balance of an allowance account from the accounts receivable account.
  • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.

• What Is a Receivable?

  • Accounts receivable is an asset which is the result of accrual accounting.
  • The accounts receivable departments use the sales ledger.
  • The accounts receivable team is in charge of receiving funds on behalf of a company and applying it towards their current pending balances.
  • Collections and cashiering teams are part of the accounts receivable department.
  • While the collection's department seeks the debtor, the cashiering team applies the monies received.