1. Prepared by: Debbie Musil Kwantlen University College Chapter 8 Accounting for Receivables

2. Types of Receivables Amounts due from individuals and other companies Accounts receivable: – Amounts owed by customers on account – Expected to be collected within 30 days Notes receivable: – Supported by formal instruments of credit – For periods of 30 days or longer – Interest bearing

3. Recognizing Accounts Receivable A receivable is recorded when: – Services are provided – Merchandise is sold on account

4. Subsidiary Accounts Receivable Ledger Subsidiary accounts receivable ledger is used to track individual customer accounts Each entry is effectively posted twice: – To the subsidiary ledger – To the general ledger in summary form

5. Other Transactions Other transactions are posted in a similar manner: – Account collections – Interest charged on overdue accounts

6. Nonbank Credit Card Sales Bank credit card sales are treated as cash sales Nonbank credit card sales are treated as sales on account – Receipt of cash from nonbank credit cards is recorded as follows

7. Homework BE 8-1,2,3,4