ch09B - PREVIEW OF CHAPTER 9 ACCOUNTING FOR RECEIVABLES...

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PREVIEW OF CHAPTER 9 ACCOUNTING FOR RECEIVABLES Accounts Receivable Types of Receivables Recognizing accounts receivable Valuing accounts receivable Disposing of accounts receivable Notes Receivable Determining maturity date Computing interest Recognizing notes receivable Valuing notes receivable Disposing of notes receivable
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DISPOSING/SALE OF ACCOUNTS RECEIVABLE To accelerate the receipt of cash from receivables, owners frequently: 1 sell to a factor such as a finance company or a bank and 2 make credit card sales A factor buys receivables from businesses for a fee and collects the payments directly from customers.
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SALE OF RECEIVABLES A company factors $600,000 of receivables to a factor, the factor assesses a service charge of 2% of the amount of receivables sold. 588,000 12,000 600,000
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CREDIT CARD SALES Credit cards are often used by retailers who wish to avoid the paperwork of issuing credit. Three parties:1. the credit card issuer , 2 the retailer , and 3. the customer . Retailers can receive cash more quickly from credit card issuers.
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