Can be listed as a debit entry along with the

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can be listed as a debit entry along with the remaining cash for the entry of the sale, or the charge can be recorded as an "other expense". The later is usually used by companies who do not sell their accounts receivable very often. The function of these entries is to help the company keep track of the percentage of income that was lost on each sale of an account receivable.Bad debts are accounted for under the direct write-off method by creating a debit entry to a bad debts expense and crediting the accounts receivable (Weygandt, et al, 2010). The method allows the company to show only the actual losses from uncollectible accounts. The companywill still report the accounts receivable at the gross amount. A major disadvantage of recording bad debts with this method is that it can make the balance sheet and income statement less useful. For instance, having a lot of accounts receivable on the books one year could turn into bad debt the next year if those accounts are not honored. Other disadvantages include not being able to match bad debt expenses to sales revenue in the same accounting period and this method does not show accounts receivable in the balance sheet at the amount that is expected to be received for them. Has anyone ever seen an example of direct write-off on a company they worked for's accounting statement and did it affect the accounting records at all?ReferencesWeygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Financial accounting(7th ed.). Hoboken, NJ: John Wiley & Sons.Response #4The term receivable refers to amounts that are due from individuals and other companies. Thedeposition of accounts receivable is when companies collect accounts receivable in cash and remove the receivables from the books or they sell their receivables to other companies like a finance company, a bank, or they make credit card sales. They can speed up the collection of cash, or sell receivables to a factor or even calculate service charge expense as a percentage of the factored receivables. These factors buy the receivables from a business for a small fee and collect the payments directly from the customers. When a company collects an account
receivable, it credits Accounts Receivable. When a company sells (factors) an account receivable, a service charge expense reduces the amount received.

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