AR

Question 1

Reinstatements

Answer 1

collectibles written off but later collected

Question 2

Direct write off method

Answer 2

Not endorsed by GAAP unless no basis to estimate the amount uncollectible, only records bad debt exp when a an AR is considered uncollectible and written off. No estimation.

Question 3

Income statement approach (allowance method)

Answer 3

estimates uncollecitble AR as a % of sales

credit sales X percentage of sales uncollectible = bad debt exp

Question 4

Balance Sheet approach (allowance method)

Answer 4

estimates uncollectible AR as a % of AR

AR X percentage of AR uncollectible = allowance for uncollectible accounts

Question 5

Accounts Receivable

Answer 5

90 day or less and does not have an interest element

Question 6

Notes Payable

Answer 6

more than 90 days and does have interest an interest element