Answer to Question #304468 in Accounting for Joel

Question

For this discussion, the focus will be on accounts receivable. Imagine you are the owner of any business of your choice. For your initial post explain the following:

What is the business that you have chosen? Why did you choose this type of business?

What products or services will your firm sell?

Would you extend trade credit to your customers? (Do not discuss credit card payments, but rather, direct credit to your customers.) Why or why not?

How will this decision affect your sales and profits?

If you choose to extend credit, how would you ensure that your firm is paid by its customers?

How would you account for customers who fail to pay their debt to your business?

Answer 1

School equipment supplier. I have chosen this business because mostly the school equipment's are required by the schools whether the school has money or not. M y business will be selling all the school equipment's especially ones used in the science practical's. Yes, i would extend credit to my customers because most time when the schools are doing practical's, for the examinations, they usually do not have enough funds, and so its logic to supply them and then payments made later on when funds are available. This decision has tremendously increased my my sales in all schools because of the loyalty we have with schools. No school has ever lacked practical equipment's and the supply has been timely.

If I extend credit to schools they usually pay. No school has ever defaulted in payment since i started the business. For the customers who fail to pay, its part of the business and the loss is recorded under the bad debts written off.