ACCT 217 Lecture 15: Reporting and Analyzing Receivables

• School: University of Calgary
• Department: Accounting
• Course: ACCT 217
• Professor: Darrin Ambrose

Document Summary

Notes receivables: a stronger claim to assets than accounts receivable; written promise (promissory. Note) to repay: a credit instrument that normally requires the payment of interest and extends for time periods greater than 30 days, often accepted from customers who need to extend payment of an account receivable and high-risk customers. Face value of note x annual interest rate x time in terms of one year = interest. Recognizing notes receivable: honored- paid in full at maturity date, collection recorded, dishonored- not paid at maturity date, balance transferred to account receivable if eventual collection is expected and balance transferred to allowance for. Doubtful notes if eventual collection is not expected. Managing receivables: determine who to extend credit, establish a payment period, monitor collections, evaluate the liquidity of receivables.