Week 10 — Receivables

Why this matters

Whether you bill a landscaping company's commercial clients, send a tutoring business's monthly invoices, or keep a repair shop's books, you need to know how much of what customers owe will really arrive.

In plain language

When a business lets customers pay later, it is owed money, and not all of that money will arrive. This week you learn to record receivables (amounts other people owe the business) in a way that is honest about the part that will never be paid. You will meet the allowance method (estimating, at the end of each period, how much customers will fail to pay) and an aging schedule (a table that sorts what customers owe by how late it is). You will also compute the interest (the extra amount a borrower pays for the use of money) on a written promise to pay. By the end, you can show a lender both what customers owe and what the business expects to collect.

• Already covered: Week 9's controls over cash and the bank reconciliation.
• This week: the allowance method, the aging schedule, write-offs, and notes.
• How they connect: the bad debt estimate is a Week 4-style adjusting entry.
• Where we're going next: Week 11, Long-Lived Assets.

Focus

How much of what its customers owe will a business really collect, and how do its books show that honestly?

By the end of this module, you should be able to:

• [ ] compare the direct write-off and allowance methods by their effects
• [ ] estimate the allowance with an aging schedule and record bad debt expense
• [ ] record a write-off and show that net realizable value does not change
• [ ] compute the simple interest and maturity value of a note

To-do

Plan your week

1. Read Chapter 10 (~35–45 minutes), then the lecture and slides.
2. Work the lecture tutorial (60–90 minutes).
3. Do the practice set (15–25 minutes).
4. Do the Accounting Workshop (about 90 minutes), the discussion, and the assignment.
5. Take the quiz.

This week's checkpoint: build the bicycle shop's aging schedule, record its bad debt adjustment, and show that the later write-off leaves net realizable value unchanged.

You've got this

Take it in order, and ask your instructor if a step snags.

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