discussion board post due TODAY @ 11
INSTRUCTIONS: Select any THREE (3) questions and discuss. If there is more than one part to a numbered question answer all parts. Start by repeating the question and note its number. Then provide your answer. There is no credit for late posts after March 26. One or more of these questions may be adapted from the textbook end of chapter Discussion Questions. 1. In the normal course of business many companies make sales on credit. Please answer the following. (a) How is a credit sale recorded? (b) Are accounts receivable generally current or noncurrent assets? (c) How does a company keep track of amounts due from individual customers? 2. The allowance method is used to estimate and record bad debt expense. There are generally two ways in which the allowance method can be used to estimate bad debts. One is the percentage of sales method and the other is the percentage of receivables method. (a) Explain the percentage of sales method to estimate bad debts. (b) Explain the percentage of receivables method to estimate bad debts. (c) What is the journal entry (without amounts) to record the estimated bad debt expense? 3. In the normal course of business, some customers do not pay the amount they owe the company who made the sale to them. These are known as bad debts. Two methods of accounting for bad debts are the direct write-off method and the allowance method. Please answer the following. (a) The direct write-off method is not acceptable under generally accepted accounting methods (GAAP) unless the amount of bad debts is immaterial. Please explain the rationale. (b) The allowance method is acceptable under GAAP. Why is this method considered to be acceptable when the other method is not? (c) Sometimes the company may not be able to collect an account receivable. What is the journal entry (without amounts) to write off an account that is deemed uncollectible under the allowance method after all collection efforts have failed to collect? 4. What is an aging schedule of accounts receivable? What is the objective of this schedule? 5. What are the differences between a note receivable and an account receivable? 6. A company may have a need to raise cash. One way to raise cash is to sell the accounts receivable or pledge the receivables. Explain what is involved in both situations. 7. Accounts receivable turnover: (a) Explain what it is. (b) Explain how it is computed. (c) Discuss how it is interpreted.