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Accounts Receivables In addition to providing group training services, BeFit has also collaborated with local producers and sold fitness clothing and accessories. Some of the
Accounts Receivables In addition to providing group training services, BeFit has also collaborated with local producers and sold fitness clothing and accessories. Some of the products are sold within the company and some others are sold to retailers. To maintain the relationship with the retailers, BeFit never chase them for payments. The CFO has already discussed with the owners about the possibility of moving to the allowance method of accounting for doubtful debts. While they are supportive of the allowance method, Rob is debating the merits between the percentage of net credit sales method and the ageing method in accounting for doubtful debts. Question 5: Propose and justify whether BeFit should apply the percentage of net credit sales method or the ageing method in accounting for doubtful debts
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