At 15 days overdue whitehall robins phones the client

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At 15 days overdue, Whitehall-Robins phones the client. Often there’s a reasonable explanation for the delay—an invoice may have gone astray, or the payables clerk is away. ”But if a customer keeps on delaying, and tells us several times that it’ll only be a few more days, we know there’s a problem,” says Ms. Su. After 45 days, “I send a letter. Then a second notice is sent in writing. After the third and final notice, the client has 10 days to pay, and then I hand it over to a collection agency, and it’s out of my hands.” Ms. Su knows that management of receivables is crucial to the profitability of Whitehall-Robins. “Receivables are generally the second-largest asset of any company (after its capital assets),” she points out. “So it’s no wonder we keep a very close eye on them.” The Navigator a19 Inside Chapter 9… When Investors Ignore Warning Signs (p. 406) How Does a Credit Card Work? (p. 408) All About You: Should You Be Carrying Plastic? (p. 416) PDF Watermark Remover DEMO : Purchase from to remove the watermark
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Preview of Chapter 9 As indicated in the Feature Story, receivables are a significant asset for many pharmaceutical companies. Because a significant portion of sales in the United States are done on credit, receivables are significant to companies in other industries as well. As a consequence, companies must pay close attention to their receiv- ables and manage them carefully. In this chapter you will learn what journal entries companies make when they sell products, when they collect cash from those sales, and when they write off accounts they cannot collect. The content and organization of the chapter are as follows. The Navigator a19 Accounts Receivable Recognizing accounts receivable Valuing accounts receivable Disposing of accounts receivable Types of Receivables Accounts receivable Notes receivable Other receivables Notes Receivable Determining maturity date Computing interest Recognizing notes receivable Valuing notes receivable Disposing of notes receivable Statement Presentation and Analysis Presentation Analysis Accounting for Receivables The term receivables refers to amounts due from individuals and other companies. Receivables are claims that are expected to be collected in cash.They are frequently classified as (1) accounts receivable, (2) notes re- ceivable, and (3) other receivables. Accounts receivable are amounts owed by customers on account. They result from the sale of goods and services. Companies generally expect to collect these re- ceivables within 30 to 60 days.Accounts receivable are the most significant type of claim held by a company. Notes receivable are claims for which formal instruments of credit are issued as proof of the debt.A note receivable normally extends for time periods of 60–90 days or longer and requires the debtor to pay interest. Notes and ac- counts receivable that result from sales transactions are often called trade receivables .
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