Accounting for accounts receivables

(Explanations)

Learning objectives:

  • Explain the gross method and net method of recording accounts receivable in the books of accounts. What entries are made under two methods?
  • What is an uncollectible accounts expense?
  • Explain the use of balance sheet approach and income statement approach for estimating uncollectible accounts expense for a certain period of time.
  • Explain allowance method and direct write off method of recording uncollectible accounts expense of a business.
  • How accounts receivable are converted into notes receivable? What are the benefits of converting accounts receivable into notes receivable?
  • What is meant by “factoring accounts receivable”? What journal entries are made when accounts receivable are factored?
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