西方财务会计_Chapter6(47页PPT).pptx

《西方财务会计_Chapter6(47页PPT).pptx》由会员分享，可在线阅读，更多相关《西方财务会计_Chapter6(47页PPT).pptx（47页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、Chapter 6Accounts Receivable And Notes ReceivableIntroductionIn addition to cash,cash equivalents,and short-term investments,the current(liquid)assets of an entity include receivables that result from credit sales to customers.These receivables include(1)accounts receivables and(2)notes receivable.A

2、ccounts Receivable Accounts receivable are relatively liquid asset,usually converting into cash within a period of 30 to 60 days.Therefore,accounts receivable from customers are classified as current assts and are listed in the balance sheet immediately after cash and short-term investments.Accounts

3、 ReceivableThree Important Concepts about A/R 1.Cash Discounts(Sales Discounts)2.Sales Returns and Allowances 3.Bad Debts(Uncollectible Accounts)Uncollectible Accounts When a company grants credit to its customers,there usually are a few who do not pay what they promised.The accounts of such custome

4、rs are called uncollectible accounts or bad debts.The bad debts amounts that cannot be collected is an expense of selling on credit.When the bad debt expense is recorded,a contra asset account Allowance for uncollectible accounts is established to report accounts receivable in the balance sheet at t

5、he amounts expected to be collected.Uncollectible Accounts ReceivableWhen credit is extended,some amount of uncollectible receivables is generally inevitable.If uncollectible receivables are probable and can be estimated,an estimate should be made of the amount uncollectible and recorded in the peri

6、od in which the revenue was produced(allowance method).We can also write off uncollectible accounts directly to an expense account if we dont want to maintain an allowance account for accounts receivable(direct writing off method)Allowance MethodWhen we estimate the amount of our uncollectible recei

7、vables,we make the following adjusting entry:The Allowance for Doubtful Accounts is a contra account to Accounts Receivables.Allowance Method As accounts become uncollectible,the following entry is made:The balance in the Allowance account reduces Accounts Receivable on the Balance Sheet.Allowance M

8、ethodIf an account previously written off proves to be collectible in a subsequent period,the following entries are made:Estimating Bad DebtsCredit Sales MethodAccounts Receivable MethodAging of accounts receivableEstimating Bad Debts:Credit Sales MethodThis method emphasizes the matching principle

9、and is considered an income statement approach.An average percentage relationship between actual bad debt losses and net credit sales is determined based on historical information.And the percentage is applied to current period net credit sales to estimate bad debt expense for the year.Credit Sales

10、MethodExample Renco,Inc.Estimate of Bad DebtsSales for 19X92,000,000$Cash sales during the period(250,000)Net credit sales1,750,000 Bad debt percentage1.25%Bad debt expense21,875$Credit Sales MethodExampleAccounts Receivable Method ExampleSingle Composite RateCrecore,Inc.determined that the balance

11、in the Allowance for Doubtful Accounts should be 2.5%of Accounts Receivable.At year-end Accounts Receivable had a balance of$191,000,and the Allowance account had a credit balance of$1,250.Prepare the adjusting entry to record Bad Debt Expense.Accounts Receivable Method ExampleAccounts Receivable Me

12、thodExample The Way of Disposing Bad Debts Writing off uncollectible accounts(textbook)During the following year,the company will find that some of its accounts are not collectible.When all efforts to collect an account fail,the account is written off.If the company decides to write off Bakers$200 p

13、ast-due account,Feb.6 Allowance for Uncollectible Accounts 200 Accounts Receivable 200 Notice:writing off a bad debt does not affect owners equity,nor does it change the net amount of accounts receivable.See page138If the estimate of doubtful accounts was a good one,most of the allowance account wil

14、l be used up by the end of the next accounting period.The amount remaining in this account at the end of the year,whether a debit or a credit,is again adjusted to bring the account to the proper balance when a new estimate is made.Collecting written-off accounts Occasionally an account that was writ

15、ten of is later collected.For example,Trammel Corporation collects a$80 account that was written of last year.Mar.11 Accounts Receivable 80 Allowance for Uncollectible Accounts 80 To restore Palmers account previously written off.11 Cash 80 Accounts Receivable 80 Collected Palmers account.Direct wri

16、ting off methodDirect written-off method-to write off the actual bad debts _when an account is considered to be uncollectible,the following entry may be made:Bad Debts Expense#Accounts Receivable#To write off somebodys account._No adjusting entry to made at the end of the accounting period.Notes Rec

17、eivable A promissory note is a legal document signed by the maker,or borrower,promising to pay to the lender,or payee,the principal amount of the note plus interest at a stated rate.A note receivable is an promissory note.(see next slide)Notes ReceivableAn unconditional written promise.Made&signed b

18、y the maker(borrower).To pay the bearer or stated payee.A definite amount of money.Notes ReceivableFrequently businesses accept notes from their customers in exchange for merchandise or for accounts receivable that the customer does not pay when due.The business may accept the note to accommodate th

19、e customer or to make the sale,which might be lost if cash payment were required.A note can be sold to a bank or other institution when the holder needs cash(discounting).In this case,the payee endorses the note by signing it on the back(endorsement).Accounting For Notes Receivable A note received f

20、rom a customers is an asset because it becomes a claim against the buyers for the amount due.On Dec.1 Beylor Company received a$6,000 60-day 9 percent note from Miss Mendoza for services performed.Dec.1 Notes Receivable 6,000 Service Revenue 6,000 received 60-day 9percent note from Mendoza.Accountin

21、g For Notes Receivable At December 31,the end of the companys fiscal year,the interest earned to date on notes receivable should be accrued by an adjusting entry as follows:Dec.31 Interest receivable 45 Interest revenue 45 to accrue interest for the month of December on Miss Mendoza note($6000*9%*1/

22、12=$45)Accounting For Notes Receivable Sixty days later when the note is collectedJan.30 Cash 6,090 Notes Receivable 6000 Interest Receivable 45 Interest Revenue 45 Simple Interest Note (example)On November 1,19X5,Winn,Inc.loans$25,000 to Westward,Co.The note bears interest at 12%and is due on Novem

23、ber 1,19X6.Prepare the journal entry on November 1,19X5,December 31,19X5(year-end)and November 1,19X6.Simple Interest Note (example)Simple Interest Note (example)$25,000 12%=$3,000-$500=$2,500 Dishonored NotesA note that is not renewed or collected at maturity is dishonored.Interest continues to acc

24、rue on the maturity value of the note.If the note cannot be collected,the amount of the loss depends upon whether it has already been considered in the bad debt estimation.Accounting For Notes Receivable:Dishonored Notes Sometimes when a note matures,the customer is unable or unwilling to pay the de

25、bt.At that time the note should be transferred from Notes Receivable to a special account for dishonored notes.Dishonored NotesIf Mendoza does not pay her note when due,Jan.30 Accounts Receivable 6,090 Notes Receivable 6,000 Interest Revenue 45 Interest Receivable 45 to record note in default The in

26、terest revenue has been earned and is therefore recorded.Accounting For Notes Receivable:Dishonored Notes If,however,the company is not successful in collecting the note,or if it collects only a part of the note,a loss is incurred.Dishonored NotesFor example,Beylor Company may turn the defaulted not

27、e over to a collection agency.If the agency collects the note and charges a fee of 40 percent of the amount collected,July 29 Cash 3,654 Loss on Defaulted Note 2,436 Accounts Receivable 6,090 Received proceeds of past-due note from collection agency.note:The loss may also be recorded as a collection

28、 expense.Discounting Notes Receivable If a business needs cash and does not wish to hold its notes to maturity,it can discount notes with a bank in exchange for cash.The bank buys the notes and holds them to maturity,earning interest on its investment.When a bank discounts a note receivable,it first

29、 calculates the maturity value of the note.Then,using its own discount rate,it calculates the amount of interest that it will charge for the note.The interest charge by the bank is calculated on the maturity value of the note and is deducted from the maturity value to arrive at the amount of proceed

30、s,which the bank pays to the seller of the note.Discounting Notes ReceivableNote is sold to a financial institution.Discount fee is the discount rate times the maturity value of the note for the time remaining to maturity.Maker of the note pays the financial institution at maturity.Discounting Notes

31、 Receivable:(example)If Beylor discounts the Mendoza note immediately upon receiving it,and the bank charges a 10 percent discount rate,Maturity value$6,090.00Less:Discount 101.50Proceeds to seller$5,988.50 Discounting Notes Receivable(example)Dec.1 Cash 5,988.50 Interest Expense 11.50 Notes Receiva

32、ble 6,000discounted Mendoza note at 10 percent.Note:the Interest Expense represents the cost of obtaining cash today,rather than waiting until the matures.The banks discount rate is higher than the interest rate that will be paid by the note;therefore,Baylor must make up the difference to the bank.D

33、iscounting Notes Receivable:(example)If Beylor had waited 30 days before discounting the note,then Maturity value$6,090.00 Less:Discount 50.75 Proceeds to seller$6,039.25 Discounting Notes Receivable:(example)Dec.31 Cash 6,039.25 Notes Receivable 6,000 Interest Revenue 39.25 discounted Mendoza note

34、at 10 percent Discounting Notes:(exercise for students)On May 30,Apex discounts a customers$25,000 note at the bank.The note was dated May 1 and matures in 90 days.The note bears interest at 12%and the bank charges a discount of 15%on the maturity value of the note.Prepare the journal entry to recor

35、d the discounting of the note.Discounting Notes:(answer)6.3-3 Selling Notes Receivable Creates Contingent Liabilities When a note is discounted with the bank,the seller of the note is liable to the bank for the proceeds on the notes if the maker does not pay.A contingent liability arising from disco

36、unting of notes must be disclosed in the financial statements.This is usually accomplished by means of a footnote indicating the amount of the discounted notes and explaining that there is a contingent liability for this amount.In our example,if the maker of the note does not pay the bank at maturit

37、y,Beylor will have to pay the bank$6,090.Beylor may disclose its contingent liability in its Dec.31s balance sheet through some footnote.(see textbook)Selling Notes Receivable Creates Contingent Liabilities If the maker of the discounted note defaults on the note,the bank returns the note to the end

38、orser and demands payment.For our example,assume that the Mendoza note was discounted on Dec.31,as previously illustrated.On Jan.30 the note is not paid as promised.The bank returns the note to Beylor Company and collects the maturity value.Jan.30 Accounts Receivable 6,090 Cash 6,090 Beylor will now

39、 attempt to collect the note from Mendoza.If it succeeds in collecting only part of the note,the remainder is written off as a loss.Selling Notes Receivable Creates Contingent Liabilities If financial statements are prepared before the note is collected,the accrued interest revenue must be recorded,

40、and the portion of the discount that has been earned must be written off.By December 31,interest for six months has been earned on the note,part as accrued interest and part as expired discount.1、每一个成功者都有一个开始。勇于开始，才能找到成功的路。11月-2211月-22Tuesday,November 8,20222、成功源于不懈的努力，人生最大的敌人是自己怯懦。03:49:4503:49:450

41、3:4911/8/2022 3:49:45 AM3、每天只看目标，别老想障碍。11月-2203:49:4503:49Nov-2208-Nov-224、宁愿辛苦一阵子，不要辛苦一辈子。03:49:4503:49:4503:49Tuesday,November 8,20225、积极向上的心态，是成功者的最基本要素。11月-2211月-2203:49:4503:49:45November 8,20226、生活总会给你另一个机会，这个机会叫明天。08十一月20223:49:45上午03:49:4511月-227、人生就像骑单车，想保持平衡就得往前走。十一月223:49上午11月-2203:49November 8,20228、业余生活要有意义，不要越轨。2022/11/83:49:4503:49:4508 November 20229、我们必须在失败中寻找胜利，在绝望中寻求希望。3:49:45上午3:49上午03:49:4511月-2210、一个人的梦想也许不值钱，但一个人的努力很值钱。11/8/2022 3:49:45 AM03:49:4508-11月-2211、在真实的生命里，每桩伟业都由信心开始，并由信心跨出第一步。11/8/2022 3:49 AM11/8/2022 3:49 AM11月-2211月-22谢谢大家谢谢大家