Tianchong Zhan
BC ID: 950626971
Instructor: Prof. Lum
ACCT & 201
Feb 28th. 2014

Chapter 8 Questions

1. Accounts receivable are those amounting needed to be paid by customers on account, which usually results from the sale of goods and services. Notes receivable are claims for which formal instruments of credit are issued as proof of the debt. Trade receivable is more like a combination of accounts receivable and notes receivable. 2. Interest will be calculated as principle times annual interest rate and then times the period in years under notes receivable. 3. Net realizable value in accounts receivable is the net amount the company is willing to get in the amount of cash. 4. Under write-off method, it calculated as the loss to bad debts expense as the company considers the account will be uncollectable. On the other hand, every bad debt wire-off will be count under the allowance account by using the allowance method. 5. When the expenses matching well with revenue, the estimation of bad debt can be existed. 6. There are two common categories; percentage of sales, which is used as the estimation of what percentage of credit sales, will be uncollectible. 7. Percentage of receivable is the estimation of the amount on receivables that will result in losses from uncollectible accounts. 8. Accounts receivable turnover ratio is calculated by net credit sales divided by average net accounts receivable and that measures the average number of times that company collect accounts receivable in given time period. 9. Face value of note, annual interest rate and the time in terms of one year will affect the interest under notes receivable. 10. When notes receivable is honored, cash, interest revenue and interest receivable will be affected. On the other hand, accounts receivable, and interest revenue will be affected if