Ch09 - 9 Accounting for Receivables Chapter STUDY...

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396 Chapter 9 Accounting for Receivables Scan Study Objectives a Read Feature Story a Read Preview a Read text and answer p. 406 a p. 409 a p. 413 a p. 415 a Work Comprehensive p. 417 a Review Summary of Study Objectives a Answer Self-Study Questions a Complete Assignments a DO IT! After studying this chapter, you should be able to: 1 Identify the different types of receivables. 2 Explain how companies recognize accounts receivable. 3 Distinguish between the methods and bases companies use to value accounts receivable. 4 Describe the entries to record the disposition of accounts receivable. 5 Compute the maturity date of and interest on notes receivable. 6 Explain how companies recognize notes receivable. 7 Describe how companies value notes receivable. 8 Describe the entries to record the disposition of notes receivable. 9 Explain the statement presentation and analysis of receivables. The Navigator STUDY OBJECTIVES A The Navigator A DO IT! Feature Story A DOSE OF CAREFUL MANAGEMENT KEEPS RECEIVABLES HEALTHY ”Sometimes you have to know when to be very tough, and sometimes you can give them a bit of a break,” says Vivi Su. She’s not talking about her children, but about the customers of a subsidiary of pharmaceutical company Whitehall-Robins (www.whitehall-robins.com), where she works as supervisor of credit and collections. PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
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397 For example, while the company’s regular terms are 1/15, n/30 (1% discount if paid within 15 days), a customer might ask for and receive a few days of grace and still get the discount. Or a customer might place orders above its credit limit, in which case, depending on its payment history and the circumstances, Ms. Su might authorize shipment of the goods anyway. Nearly all of the company’s sales come through the credit accounts Ms. Su manages. The process starts with the decision to grant a customer an account in the first place, Ms. Su explains. The sales rep gives the customer a credit application. “My department reviews this application very carefully; a customer needs to supply three good references, and we also run a check with a credit firm like Equifax. If we accept them, then based on their size and history, we assign a credit limit.” Once accounts are established, the company supervises them very carefully. ”I get an aging report every single day,” says Ms. Su. “The rule of thumb is that we should always have at least 85% of receivables current—meaning they were billed less than 30 days ago,” she continues. “But we try to do even better than that—I like to see 90%.” Similarly, her guideline is never to have more than 5% of receivables at over 90 days. But long before that figure is reached, “we jump on it,” she says firmly.
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This note was uploaded on 01/30/2011 for the course ACT 240 taught by Professor Janson during the Summer '08 term at N. Michigan.

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Ch09 - 9 Accounting for Receivables Chapter STUDY...

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