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Unformatted text preview: = More Liquid – AT the TOP Oct. 5, 2010 Notes Ch. 9 Debtor – someone who has debt Creditor – someone who grants credit. Accounts Receivables (amounts due from others) ○ Accounts Receivable – results from the sale of goods and services – usually collected within 30-60 days. ○ Notes Receivable – usually exist 60-90 days or longer, debtor pays interest. ○ Other Receivables – nontrade receivables- generally not from operations of the business. Accounts Receivables 1. Receiving Accounts Receivable: (p. 399) Accounts Receivable Sales COGS Merchandise Inventory Accounts Receivable Interest Revenue 2. Valuing Accounts Receivable (p. 400)- Reported on Balance Sheet- Di rect Write Off Method for Uncollectible Accounts o Expense of Bad Debts shows actual losses o Effects Income Statement and Balance Sheet o Often record bad depts. Expenses in a period different from the period in which they record the revenue. (Does not attempt to match bad debts expenses to sales revenue in the income statement.). Done T HROUGHT the period. o UNLESS BAD DEBTS ARE INSIGNIFICANT , this method is not acceptable for financial reporting purposes. Bad Debts Expense (or Uncollectible Accounts Expenses) Accounts Receivable – (Company Name)- Allowance Method for Uncollectible Accounts o Involves estimating uncollectible accounts at the end of each period. o Better match on the income statement....
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This note was uploaded on 10/18/2010 for the course ACCOUNTING 211 taught by Professor Holmes during the Spring '10 term at UMBC.
- Spring '10