Answer
The percentage-of-receivable method does not point to particular accounts when estimating the amount that will be uncollectable in the outstanding accounts receivable. This method offers an estimation of the realizable value that is accurate. This method could require the utilization of a composite rate that depicts the approximation of uncollectible accounts. Alternatively, an ageing schedule that tracks the accounts receivables based on their oldness categories could be set up to establish the accounts that are in arrears. Besides the ageing analysis, control devices could be utilized to determine delinquent accounts and the constituents of each of the receivables.
Work Step by Step
The percentage-of-receivable method does not point to particular accounts when estimating the amount that will be uncollectable in the outstanding accounts receivable. This method offers an estimation of the realizable value that is accurate. This method could require the utilization of a composite rate that depicts the approximation of uncollectible accounts. Alternatively, an ageing schedule that tracks the accounts receivables based on their oldness categories could be set up to establish the accounts that are in arrears. Besides the ageing analysis, control devices could be utilized to determine delinquent accounts and the constituents of each of the receivables.
