Total Credit Sales |
– Sales Returns and Allowances |
– Sales Discounts |
Net Credit Sales |
Ending Allowance for Bad Debts = Ending A/R * Estimated % |
(Balance Sheet Method) |
Bad Debt Expense = Net Credit Sales * Estimated % |
(Income Statement Method) |
Accounts Receivable |
– Allowance for Bad Debts (or Allowance for Uncollectible Accounts) |
Net Realizable Value (or Net Accounts Receivable) |
Face Value |
* Annual Percentage Rate |
* (Months Outstanding / 12) You could use (Days Outstanding / 360) instead of months |
Interest Expense (or Revenue) |
Maturity Value = Principal + Interest |