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General Accounting Discussions: Gross Accounts Receiveables

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    How do you calculate gross accounts receivables? More specifically, are sales returns and allowances subtracted from accounts receivables to get gross accounts receivables?
    • CommentAuthormfargen
    • CommentTimeOct 9th 2008
     
    I am not familiar with this term. Possibly you are referring to gross receipts, which is more similar to gross sales. When you subtract returns and allowances, you debit the contra revenue account (the sales returns contra revenue account or the sales discounts and allowances contra revenue account). You credit the accounts receivables account for the same amount. This is explained by Mr. Averkamp in the following link:

    http://blog.accountingcoach.com/contra-revenue-account/

    Gross sales - sales returns and allowances = net sales

    We used gross receipts in my cash basis service business that I had for years, which was analogous to my gross revenue.

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