$2$ The method for recording bad debts expense $is$ the preferred method $tobe$

used $on$ a company's financial statements.

A company might borrow money $by$ using its accounts receivable $as$

for the

loan.

$To$ remind customers $of$ the amount $it$ owes, a company will mail

$to$ these

customers. This document will show the open $or$ unpaid invoices.

When goods are shipped FOB

point, the sale and accounts receivable will

occur $at$ the seller's dock.

$"\frac{2}{10},$ net $30"isan$ example $of$ credit

Under the allowance method, the write$-$off $of$ a bad account will involve two current

accounts.

Usually the Allowance for Doubtful Accounts will have a balance.

The aging $of$ accounts receivable $is$ associated with the percentage $of$

method

for determining the amount $of$ Bad Debts Expense.

The calculation $of$ the accounts receivable turnover ratio $is$ net credit sales divided $by$ the

balance $of$ accounts receivable.

A company that $isin$ the business $of$ purchasing accounts receivable.

The allowance account associated with accounts receivable $isa$

$-$asset account.

The direct write$-$off method $is$ required for federal income

purposes.

When $an$ uncollectible account $is$ written off, the account $tobe$ credited $is$ Accounts The sale $of$ accounts receivable.

Accounts receivable $is$ classified $on$ the balance sheet $asa$

asset.

Sales allow customers $to$ deduct a small percentage $of$ the amount owed $if$ the

customer pays the amount owed within a specified period $of$ time.

A trade discount $is$ often expressed $as$ a percentage that a customer can deduct from a list

appearing $in$ a catalog.

While the control account for Accounts Receivable can $be$ updated only when

statements are prepared, the subsidiary ledger for accounts receivable should $be$ updated $as$

often $as$ possible.

Under the allowance method, the percentage $of$

approach focuses $on$ the income

statement rather than the balance sheet.

Under the allowance method, the journal entry $to$ write$-$off a bad account will not cause a change

$in$ the amount $of$ a company's net

There $isno$ allowance account when using the

write$-$off method $of$ recognizing bad

debts expense.

Accounts Receivable that arise from the regular sales $of$ merchandise are also referred $toas$

receivables.

A company with millions $of$ credit transactions will find that the allowance method does a better

job $of$

bad debts expense with revenues than the direct write$-$off method.

Bad Expense $is$ also referred $toasan$ Uncollectible Account Expense.

The document sent $to$ the customer when merchandise $is$ shipped $is$ a sales

Accounts receivable minus the allowance for uncollectible accounts $is$ the calculation $to$

determine the net

$(or$ cash$)$ value $of$ the accounts receivable.

Sorting the accounts receivable into current, $1-30$ days past due, $31-60$ days past due, and $so$

$on,is$ known $as$ the $of$ accounts receivable.

When using the percentage $of$ receivables under the allowance method, the focus $ison$

obtaining the appropriat$$

$in$ the allowance account.

$If$ a company using the allowance method writes off more than the balance available $in$ its

allowance account, the account will have $a$

balance.