Accounts Receivable or Trade Receivables
A/R should be reported in B/S at Net Realizable Value (NRV) A/R at gross amount is adjusted for
- Cash Discounts (discounts for prompt payments)
- Trade discounts (recorded net of any trade discounts) balk purchases.
- Bad Debts (representing receivables which are uncollectible)
- Sales Returns and allowances (expected to be returned in future)
A/R Account Analysis (Use T format or the “BASE” calculation)
Beginning Balance
Add: Credit sales / Bad debt recoveries
Subtract: Cash collected / Bad debts
Ending balance