ACCOUNTS RECEIVABLE

Receivable - financial assets that represent a contractual right to receive cash or another financial asset from another entity.
- Nagkakaroon ng receivable kapag nagbebenta ng goods and services ON ACCOUNT
- Nagkakaroon ng receivable pag nagpautang
- Nagkakaroon ng receivable pag may advances
TWO TYPES OF RECEIVABLE:
1. Trade Receivable – Current Asset
- Result from the normal operation of the business. Trade Receivable mo is mga collectible mo sa customer mo na di mo pa nasisingil.
SPECIAL ACCOUNTS PAG SILENT

CREDITORS ACCOUNT WITH DEBIT BALANCE – company ang nangutang. Nagiging debit balance siya kapag may defective yung product na binigay sayo so same pa rin
value pero ung defective amount is ilalagay sa debit kung how much.

AR (Initially) @FACE VALUE – kung magkano talaga pinautang mo

AR (Subsequently) @NET REALIZABLE VALUE – AR less ASD, ASR, AF, ADA

CASH DISCOUNT THREE TYPES

1. GROSS METHOD – Accounts Receivable and Sales at GROSS (amount) > meaning walang minanus.
- Sales Discount is only recognized only (or magma-minus lang kapag) kapag nagbayad na.
2. NET METHOD – Accounts Receivable and Sales at NET (amount) > meaning na less/minus na yung cash discount.
- Tapos mag re-record na lang ng Sales Discount FORFEITED kapag hindi nakapagbayad sa cash discount period.
3. ALLOWANCE METHOD – Accounts Receivable at GROSS (amount). Sales at NET (amount) > na minus na ang discount then recognize contra-asset which is
ALLOWANCE FOR SALES DISCOUNT.
- Tapos mag re-record na lang ng Sales Discount FORFEITED kapag hindi nakapagbayad sa cash discount period.

200,00 dapat

Sales Return – may physical na ibabalik.

Allowance for Sales Return – tinanggap na sales pero may defect so ibabawas sa sales.
 Magkasama sa entry or sa isang account title.
Dr. AR
Dr. Sales Return
Cr. Sales
Cr. Allowance for SR
FOB – Free On Board

BAD DEBTS – mga pautang/ar na HINDI NA MABABAYARAN.

Sequence of Computation:
1. Accounts Receivable – ending (gross accounts receivable)
 Hindi pa nakabawas yung mga allowances.
2. Allowance for Bad Debt – contra asset
 Mina-minus sa asset para makuha yung carrying amount parang accumulated depreciation.
 Mina-minus sa accounts receivable para makuha yung carrying amount ng accounts receivable.
3. Bad Debt Expense – Expense (nominal account)
 Mga income na hindi mo na nako-kolekta.
4. Net Realizable Value (NRV) of Accounts Receivable
 Subsequent measurement of accounts receivable.
 Portion ng iyong receivable na mare-realize mo na lang or mako-kolekta mo.

ACCOUNTS RECEIVABLE BALANCE

Ways in computing the ending balance of trade accounts receivable (AR):

1. Unadjusted ending to Adjusted ending

AR Ending – UNADJUSTED xx
Reversal of NSF check xx
Customer’s Credit balance xx
Goods in Transit (x)x
AR Ending – ADJUSTED P xx

 NSF CHECK – Addition sa Accounts Receivable

NSF Check Entry: (nung natanggap mo)
Cash xx
AR xx
Reverse Entry: (nalaman ng bank na NSF)
AR xx
Cash xx

 Customer’s Credit Balance – abnormal balance – sobrang receipt mula sa customer.

- Pag sinabing customer’s account – subsidiary ledger – meaning inaalam mo kung magkano pa receivable mo sa bawat customer mo.
- Customer’s Account – represents accounts PAYABLE for each customer – normal balance is DEBIT.
- Pag may sobrang binayad ang customer treated as ADVANCES from customer so may payable ka na sakanya kasi may obligation ka na sakanya.
- Liability sa Asset – BAWAL e-off set.
- Add back to AR.

 Goods in Transit – nagbenta ng goods tapos malayo, possible na hindi agad makakarating o nasa byahe pa (in transit).
- Nakadepende kung may receivable ka na pag nasa byahe pa lang, why?
-
AR should be Already recorded Not yet recorded
recorded or not?
WITH TRANSFER NO ADJUSTMENT ADD
TITLE – pag ma-may
ari na ng buyer.
(should be
recorded)
*FOB shipping point
*FOB seller
*FOB CIF/FAS
WITHOUT MINUS NO ADJUSTMENT
TRANSFER TITLE –
pag ma-may ari pa
ng seller. (should
not be recorded)
*FOB destination
*FOB buyer
*FOB ex-ship

2. Beginning AR to Ending AR
Accounts Receivable

Beginning xx
Credit Sales xx Collection xx
Recovery xx Collect WO xx
Write Off xx
Return xx
Discount xx
Ending xx

 Credit Sales - Sales on account. Hindi rito kasama ang cash sales.
- Pag binigay ay TOTAL SALES – remove the cash sales.
- Entry for credit sales:
Dr. AR xx
Cr. Sales xx
- ADDITION

 Collection – naka-kolekta ng accounts receivable.

- Entry for collection:
Dr. Cash xx
Cr. AR xx
 Write off – remove from your record in ar (mataas na possibility na ang ar o ay hindi mo na mako-kolekta.)
- Entry for write off:
Dr. Allowance for Bad Debt xx
Cr. AR xx
- DEDUCTION
 Recovery – nakolekta mo na kala mo di mo na mako-kolekta.
- Entry for Recovery:
Dr. AR xx
Cr. Allowance for BD xx
- ADDITION
- May next entry pa na need e-record.
- Entry for collection of recovery:
Dr. Cash xx
Cr. AR xx
- DEDUCTION
- SO WALANG EFFECT dahil dinebit mo sa una yung AR then icre-cerdit mor in siya sa next entry.
- BUT BE CAREFUL kasi
1. Pag nagbigay ng collection is kasama na yung collection of write off OK NA.
2. Pag nagbigay ng collection tapos hindi pa kasama yung write off, ISAMA MO PA.
 Return – ON ACCOUNT
1. Refund – nagsauli ng goods tapos nagbayad sayo ON CASH. WALANG EFFECT SA AR.
2. Credit Memo – bumili sayo ON ACCOUNT, tatanggalin na yung receivable sakanila.
- Entry for Return:
Dr. Sales return xx
Cr. AR xx
- DEDUCTION
- At year end, PAKIRAMDAM mo na may magsasauli > SALES RETURN iyon pero hindi mo ibabawas sa AR.
- Entry for Allowance on sales return. (pakiramdam mo palang na mababalik)
Dr. Sales Return xx
Cr. Allowance for sales return xx
 DISCOUNT – kabawasan sa AR ofc discount.
- Entry for discount:
 Dr. Sales discount xx
Cr. Ar xx
- Expected discount entry:
Dr. Sales discount xx
Cr. Allowance for sales discount xx
- DEDUCTION SA SURENESS NA DISCOUNT.

WRITE OFF – receivable that was DEFINITELY UNCOLLECTIBLE (deemed worthless/ di na makokolekta ang receivable).
ALLOWANCE OF RECEIVABLE – portion of ending receivable that is expected NOT TO BE REALIZED because the customer is:
a. Expected to default (allowance for bad debt)
b. Expected to return the goods (allowance for sales return)
c. Expected to take the discount (allowance for sales discount)
d. Expected to offset the freight paid in behalf of the company (allowance for freight)
- FOB Destination – seller dapat ang shoulder ng bayad pero pag FOB Destination, Freight Collect meaning inabonohan ng customer ang shipping so ibabawas niya na lang
sakanyang payable (off set) at the same time mababawasan ang ating ar.
BAD DEBT EXPENSE – portion of sales on account but EXPECTED NOT TO BE REALIZED because of CUSTOMER’S DEFAULT.
RECOVERY OF WRITE OFF – receivable that was believe to be definitely uncollectible but was SUBSEQUENTLY RECOVERED by the company.
NRV OF RECEIVABLE – portion of receivable that is EXPECTED TO BE REALIZED.

Which to compute first? IT DEPENDS

1. Estimating Bad Debt > IF GIVEN IS Percentage of AR > Compute first the Allowance for Bad Debt > then compute the Bad Debt Expense.

COMPUTATION FOR ALLOWANCE FOR BAD DEBT:

AR – Ending xx
Percentage of Uncollectible x%
Allowance for Bad Debt, End xx

PAG HINDI GIVEN ANG PERCENTAGE OF UNCOLLECTIBLE THIS IS THE FORMULA

Allowance for Bad Debt, Beginning

Accounts Receivable, Beginning
= Percentage of Uncollectible
Or

Write off – Recovery

Sales
= Percentage of Uncollectible

COMPUTATION FOR BAD DEBT EXPENSE:

Beginning xx
Write off xx Recovery xx
Bad Debt Expense
xx (SQUEEZE)

Ending (Computed
na Allowance for
Bad debt, eding)
xx
 2. Estimating Bad Debt > IF GIVEN IS Percentage of Sales > Compute first the Bad Debt Expense > then compute the Allowance for Bad Debt.
COMPUTATION FOR BAD DEBT EXPENSE

Net Credit Sales xx

Percentage of Uncollectible x%
Bad Debt Expense xx

PAG HINDI GIVEN ANG PERCENTAGE OF UNCOLLECTIBLE THIS IS THE FORMULA

Allowance for Bad Debt, Beginning

Accounts Receivable, Beginning
= Percentage of Uncollectible
Or

Write off – Recovery

Sales
= Percentage of Uncollectible

COMPUTATION FOR ALLOWANCE FOR BAD DEBT

Beginning xx
Write off xx Recovery xx
Bad Debt Expense
(amount sa
computed sa bad
debt) xx

Ending xx

3. Estimating Bad Debt > IF GIVEN IS Aging of AR > Compute first the Allowance for Bad Debt > then compute the Bad Debt Expense.
COMPUTATION FOR ALLOWANCE FOR BAD DEBT:

AR – Ending xx
Percentage of Uncollectible x%
Allowance for Bad Debt, End xx

(NAKA GROUP SA AGE THEN ADD ALL = TOTAL ALLOWANCE)

COMPUTATION FOR BAD DEBT EXPENSE:

Beginning xx
Write off xx Recovery xx
Bad Debt Expense
(SQUEEZE) xx

Ending (Computed
TOTAL na
Allowance for Bad
debt, eding)
xx

HABANG TUMATAAS ANG SALES, TUMATAAS DIN ANG EXPENSE.