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The three primary accounting problems associated with accounts receivable are recognition of accounts receivable，valuation of accounts receivable and disposition of accounts receivable.

5.2.1Recognition of Accounts Receivable

The recognition of accounts receivable involves the accounting issues of timing and measurement.In most receivable transactions，the amount to be recognized is the exchange price between the two parties.The exchange price is the amount due from the debtor(a customer or borrower)and is generally evidenced by some type of business document，often an invoice.Two factors that may complicate the measurement of the exchange price are:(1)the availability of discounts(trade and cash discounts)and(2)the length of time between the sale and the due date of payments(the interest element).

Customers often quoted prices on the basis of list or catalogue prices that may be subject to a trade or quantity discount.Trade discounts are used to avoid frequent changes in catalogue，or to quote different prices for different quantities purchased，or to hide the true invoice price from competitors.They are commonly quoted in percentages.For example，if a textbook has a list price of$50.00 and the publisher sells it to college bookstores for list less a 30%trade discount，the receivable recorded by the publisher is$35.00 per textbook.The normal price practice is simply to deduce the trade discount from the list price and bill the customer.

Cash discounts(sales discounts)are offered as an inducement to prompt payment，and communicated in terms that read 2/10，n/30(2%if paid within 10 days，gross amount due in 30 days).Companies that fail to take sales discounts are usually not employing their money advantageously.An enterprise that receives a 2%reduction in the sales prices for payment 10 days，total payment due within 30 days，is effectively earning 73%(0.02 divided by 10/365).For this reason，it is usual for companies to take the discount unless their cash is severely limited.

5.2.2Valuation of Accounts Receivable

Having recorded the receivables at their face value(the amount due)，the accountant then faces the problem of reporting them in the financial statements.Reporting of receivables involves(1)their classification and(2)their valuation on the balance sheet.Classification，as already discussed，involves a determination of the length of time the receivable will be outstanding.Receivables which intended to be collected within a year or the operating cycle are classified as short-term，whichever is longer，are classified as long-term.

The valuation of receivables is slightly more complex.Short-term receivables are valued and reported at net realizable value—the net amount expected to be received in cash.The methods of estimating these reductions or offsets to the amount due are discussed below.

Sale on any basis other than for cash makes subsequent failure to collect the account a real possibility.An uncollectible account receivable is a loss of revenue that requires，through proper entry in the accounts，a decrease in the asset account receivable and a related decrease in income and shareholders'equity.The chief problem in recording uncollectible accounts receivable is establishing the time at which to record the loss.Two general procedures are in use:(1)No entry is made until a specific account has definitely been established as uncollectible.Then the loss is recorded by crediting Accounts Receivable and debiting Bad Debt Expense.This is normally referred to as the“direct write-off”method for receivables.(2)An estimate is made of the expected uncollectible accounts from all sales made on account or from the total of outstanding receivables.This estimate is entered as an expense and a reduction in accounts receivable(via an increase in the allowance account)in the period in which the sale is recorded.This is usually called the“allowance”method.

The direct write-off method records the bad debt in the year it is determined that a specific receivable cannot be collected;the allowance method enters the expense on an estimated basis in the accounting period that the sales on account are made.Either method is acceptable for tax purposes as long as it is consistently applied.

5.2.3Disposition of Accounts Receivable

In the normal course of events，accounts are liquidated and removed from the books as a result of payment.The amounts due are collected in the form of cash，and the operating cycle is completed.However，as credit sales and receivables have grown in size and significance，the“normal course of events”has changed.For example，in order to accelerate the receipt of cash from receivables，the owner may transfer the receivables to another company of other third party for cash，thereby shortening the cash-to-cash cycle.

There are various reasons for this early transfer.First，for competitive reasons，providing sales financing for customers is virtually mandatory in many industries.For example，in the sale of durable goods，such as automobiles，industrial and farm equipment，computers.Many of the major companies in these industries have therefore created wholly owned subsidiaries with responsibility for accounts receivables financing.Second，the holder of receivables may resort to a sale because it is the only reasonable source of funds.In times of tight money，access to normal credit markets is not available，or if available，the cost of funds may be prohibitive.Finally，billing and collection are often time-consuming and costly.Conversely，banks and other lending institutions may be forced to purchase receivables because of legal lending limits;that is，they cannot make any additional loans but they can buy receivables and charge a fee for this service.

The transfer of accounts receivable to a third party for cash is generally accomplished in one of two ways:(1)Assignment of accounts receivable(pledging a security in terest in accounts receivable).In an assignment of accounts receivable，the owner of the receivables(the assignor)borrows cash from a lender (the assignee)by writing a promissory note that contains a provision designating the accounts receivable as collateral.If the note is not paid when due，the assignee has the right to convert the collateral to cash，that is，to collect the receivables.(2)Sale of accounts receivable.Sales of receivables have increased substantially in recent years.A common type of sale of receivables is a sale to a factor.Factors are finance companies or banks that buy receivables from businesses for a fee and then collect the remittances directly from the customers.Factoring，traditionally associated with the textiles，apparel，footwear，furniture，and home furnishing industries，has now spread to many other types of businesses.

1.Those receivables expected to be collected within a year or the current operating cycle，whichever is longer，are classified as current receivables;all other receivables are classified as noncurrent.短期应收款项是指那些预期将在一年之内或超过一年的营业周期之内回收的款项，其他的则为长期应收款项。该句为并列复合句，分号连接一个主从句及一个简单句。在分号之前的复合句中，主句为Those receivables are classified as current receivables，其主语带有一个很长的过去分词短语作定语，即expected to becycle;cycle又带有一个由关系代词whichever引导的非限制性定语从句，whichever在从句中作主语。

2.Trade discounts are used to avoid frequent changes in catalogue，or to quote different prices for different quantities purchased，or to hide the true invoice price from competitors.商业折扣可以用来避免商品价目表的频繁变动，也可以对购买不同数量商品的客户给予不同的报价，还可以向竞争者隐瞒真实的发票价格。该句为简单句，主语为Trade discounts，谓语为are used，谓语之后带有三个并列的不定式短语作宾语。

3.Cash discounts(sales discounts)are offered as an inducement to prompt payment，and communicated in terms that read 2/10，n/30(2%if paid within 10 days，gross amount due in 30 days).现金折扣(销售折扣)是企业为了鼓励客户早日偿还货款而给予的折扣优待，通常写成2/10、n/30的形式(如果在10天之内付款折扣为2%，30天之内全价付款)。该句为主从复合句。主句有两个谓语动词，即are offeredand(are)communicated in terms第二个谓语动词省略了are。在第二个谓语动词的状语中，terms又带有一个由关系代词that引导的定语从句，说明terms的内容。

4.Classification，as already discussed，involves a determination of the length of time the receivable will be outstanding.应收账款的分类在前面已经讨论过，主要取决于未付款项的时间长短。该句为主从复合句。主句为Classification involves a determination of the length of time。主句中主语之后的as already discussed为分词短语作状语。该句句末的the receivable will be outstanding可看成省略了when的定语从句，修饰the length of time，省略的理由是:在不少情况下可以不用when，特别是在某些时间状语中。如:Come any time you like.你随便什么时候来都行。

5.An uncollectible account receivable is a loss of revenue that requires，through proper entry in the accounts，a decrease in the asset account receivable and a related decrease in income and shareholders'equity.企业通过将坏账损失计入适当账户，减少应收账款资产项，并相应减少收入和股东权益。该句为主从复合句。主句为主系表结构，即An uncollectible account receivable is a loss of revenue。其表语revenue带有一个由关系代词that引导的定语从句，在该定语从句中，that起主语作用，谓语为requires，宾语有两个，即①a decrease②a related decrease定语从句中位于requires之后的介词短语作状语。

6.This estimate is entered as an expense and a reduction in accounts receivable(via an increase in the allowance account)in the period in which the sale is recorded.采用这种方法，在记录销售的会计期间估计坏账损失计入费用，同时通过增加坏账准备减少应收账款。该句为主从复合句，主句主语为This estimate，谓语为is entered，状语为as an expensein the period，在该状语中，period一词又带有一个由“介词+关系代词”引导的定语从句，修饰其先行词。

7.In an assignment of accounts receivable，the owner of the receivables (the assignor)borrows cash from a lender(the assignee)by writing a promissory note that contains a provision designating the accounts receivable as collateral.在委托收取应收账款过程中，应收账款的所有者(委托人)通过签发以应收账款作为抵押的本票而向贷款方(受托人)借得现金。该句为主从复合句。主句为the owner of the receivables borrows cash from a lender by在by引导的介词短语中，a promissory note又带有一个由关系代词that引导的定语从句，修饰note;that在定语从句中作主语。

8.Factoring，traditionally associated with the textiles，apparel，footwear，furniture，and home furnishing industries，has now spread to many other types of businesses.代理以前涉及纺织品、服装、鞋类、家具和家装行业，现在已经扩展到其他行业。该句为简单句，属主谓宾结构，即Factoring has now spread to many other types of businesses。位于主语Factoring之后的过去分词短语traditionally associated with作定语，修饰factoring。

1.For each of the following，which choice—(A)，(B)，or(C)—should be inserted in the blank to make a correct statement?

(1)Which of the following method provides the greatest degree of accuracy over the recognition of bad debts expense?

A.Direct write-off.　B.Net sales.　C.Aging of accounts receivable.

(2)Which of the following method is the least desirable way to recognize uncollectible accounts?

A.Direct write-off.　B.Net sales.　C.Aging of accounts receivable.

(3)The issuer of a promissory note records the notes in an account entitled_______.

A.“Notes Payable”　B.“Notes Receivable”　C.“Accounts Payable”

(4)The maturity value of an interest-bearing not e is_______.

A.the face value of the note　B.the principal+interest

C.the principal+interest+a service charge imposed by the lender

2.Translate the following terms into Chinese.

(1)aging of accounts receivable method

(5)direct write-off method

1.Record the following transactions.

Mar.6Sold goods to Standish，Inc.，for$840.Terms;n/30

　　　　　　9Sent a credit memorandum for$60 to Standish，Inc.For returning damaged Merchandise

Apr.14Received a check from Standish，Inc.，for$300 in part payment of the Mar.6 invoice.

　　　　　　　18Determined that the balance Standish，Inc.，owed us is uncollectible.Decided to write off the account.

　　　　　　　26Received a check from Standish Inc.，for$100.This represented partial restoration of the account previously written off.

2.The Ruth Allen Co.had these account balances at the end of the calendar year，accounts receivable，$541，300;allowance for bad debts，$10，912.Make entries in general journal for the following transactions for the new year:

(1)Sales made on credit amounted to$5，456，575.

(2)Cash sales made during the year amounted to$121，214.

(3)Collections of accounts during the year were as follows:actual cash collected，$5，381，642;sales discounts allowed，$130，004.

(4)Wrote off uncollectible accounts amounting to$9，280.

(5)Collected$2，340 for an account that had previously been written off.

(6)Made the adjusting entry to recognize bad debts based on 1%net credit sales for the year.

3.On January 1，2010，A Co.sold$600，000 accounts receivable to bank of America，the bank charged 3%of the book value of accounts receivable as a service fee，and seized 5%of the book value of accounts receivable as a possibly allowance for cash discount or sales return.

Record the following transactions:

(1)On 1/1，sold the accounts receivable.

(2)In Jan and Feb.，Bank of America received cash$572，000，And cash discount was$13，000，sales return was$11，000.