Summary
Financial Accounting: Accounts Receivable summary
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Summary for Accounts Receivable
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Accounts Receivable – open accounts arising from the sale of goods and services in the ordinarycourse of business and not supported by promissory notes.
Other Terms for AR:
1. Customer’s accounts
2. Trade debtors
Valuation:
1. Initial – The amount to be recorded as accounts receivable from sales on account shall be
the Invoice Price,
2. Subsequent – The ending balance of accounts receivable shall be presented at the NRV or
amortized cost.
List Price xx
Trade Discounts, Rebates, and other similar items (xx)
Invoice Price xx
Accounts Receivable xx
Allowance for Sales Return (xx)
Allowance for Sales Discount (xx)
Allowance for Freight Charges (xx)
Allowance for Bad Debts (xx)
NRV/Amortized Cost xx
Methods to account for sales discount:
1. Gross Method
a. Sales on account:
▪ AR (Gross) xx
Sales (Gross) xx
b. When payment is made within the discount period:
▪ Cash (Net) xx
Sales Discount xx
AR (Gross) xx
c. When payment is made beyond the discount period:
▪ Cash (Gross) xx
AR (Gross) xx
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