ACCTMIS 2200 Lecture Notes - Lecture 8: Weighted Arithmetic Mean, Income Statement

• School: Ohio State University
• Department: Accounting and Management Info
• Course: ACCTMIS 2200
• Professor: Marc Smith

Document Summary

Percentage of sales (net credit sales method) i) ii) iii) Bde based on % of current credit sales estimated to be uncollectible. Bde = net credit sales * % expected uncollectible b) Percentage of receivables (aging method) i) ii) iii) iv) v) vi) Analysis of ar balance to determine how long ar has been unpaid. Older the ar is, less likely the ar will be paid. Put ar into categories by age, then assign % expected to be uncollectible to each category. Number above is not bde, it is required ending credit balance in allowance for doubtful accounts. To get bde, set up t-account and algebra. Measures number of times on average the company collects ar. Net sales revenue / average ar amount = + ar(end of year) / 2 = average ar amount. How many times old receivables are collected c) How many times old receivables are collected and replaced by new ones.