西方财务会计Chapter(3).ppt

Chapter6,AccountsReceivableAndNotesReceivable,Introduction,Inadditiontocash,cashequivalents,andshort-terminvestments,thecurrent(liquid)assetsofanentityincludereceivablesthatresultfromcreditsalestocustomers.Thesereceivablesinclude(1)accountsreceivablesand(2)notesreceivable.,AccountsReceivable,Accountsreceivablearerelativelyliquidasset,usuallyconvertingintocashwithinaperiodof30to60days.Therefore,accountsreceivablefromcustomersareclassifiedascurrentasstsandarelistedinthebalancesheetimmediatelyaftercashandshort-terminvestments.,AccountsReceivable,ThreeImportantConceptsaboutA/R1.CashDiscounts(SalesDiscounts)2.SalesReturnsandAllowances3.BadDebts(UncollectibleAccounts),UncollectibleAccounts,Whenacompanygrantscredittoitscustomers,thereusuallyareafewwhodonotpaywhattheypromised.Theaccountsofsuchcustomersarecalleduncollectibleaccountsorbaddebts.Thebaddebtsamountsthatcannotbecollectedisanexpenseofsellingoncredit.Whenthebaddebtexpenseisrecorded,acontraassetaccountAllowanceforuncollectibleaccountsisestablishedtoreportaccountsreceivableinthebalancesheetattheamountsexpectedtobecollected.,UncollectibleAccountsReceivable,Whencreditisextended,someamountofuncollectiblereceivablesisgenerallyinevitable.Ifuncollectiblereceivablesareprobableandcanbeestimated,anestimateshouldbemadeoftheamountuncollectibleandrecordedintheperiodinwhichtherevenuewasproduced(allowancemethod).Wecanalsowriteoffuncollectibleaccountsdirectlytoanexpenseaccountifwedontwanttomaintainanallowanceaccountforaccountsreceivable(directwritingoffmethod),AllowanceMethod,Whenweestimatetheamountofouruncollectiblereceivables,wemakethefollowingadjustingentry:,TheAllowanceforDoubtfulAccountsisacontraaccounttoAccountsReceivables.,AllowanceMethod,Asaccountsbecomeuncollectible,thefollowingentryismade:,ThebalanceintheAllowanceaccountreducesAccountsReceivableontheBalanceSheet.,AllowanceMethod,Ifanaccountpreviouslywrittenoffprovestobecollectibleinasubsequentperiod,thefollowingentriesaremade:,EstimatingBadDebts,CreditSalesMethodAccountsReceivableMethodAgingofaccountsreceivable,EstimatingBadDebts:CreditSalesMethod,Thismethodemphasizesthematchingprincipleandisconsideredanincomestatementapproach.Anaveragepercentagerelationshipbetweenactualbaddebtlossesandnetcreditsalesisdeterminedbasedonhistoricalinformation.Andthepercentageisappliedtocurrentperiodnetcreditsalestoestimatebaddebtexpensefortheyear.,CreditSalesMethodExample,Renco,Inc.,EstimateofBadDebts,Salesfor19X9,2,000,000,$,Cashsalesduringtheperiod,(250,000),Netcreditsales,1,750,000,Baddebtpercentage,1.25%,Baddebtexpense,21,875,$,CreditSalesMethodExample,AccountsReceivableMethodExample,SingleCompositeRateCrecore,Inc.determinedthatthebalanceintheAllowanceforDoubtfulAccountsshouldbe2.5%ofAccountsReceivable.Atyear-endAccountsReceivablehadabalanceof$191,000,andtheAllowanceaccounthadacreditbalanceof$1,250.PreparetheadjustingentrytorecordBadDebtExpense.,AccountsReceivableMethodExample,AccountsReceivableMethodExample,TheWayofDisposingBadDebtsWritingoffuncollectibleaccounts(textbook),Duringthefollowingyear,thecompanywillfindthatsomeofitsaccountsarenotcollectible.Whenalleffortstocollectanaccountfail,theaccountiswrittenoff.IfthecompanydecidestowriteoffBakers$200past-dueaccount,Feb.6AllowanceforUncollectibleAccounts200AccountsReceivable200,Notice:,writingoffabaddebtdoesnotaffectownersequity,nordoesitchangethenetamountofaccountsreceivable.Seepage138Iftheestimateofdoubtfulaccountswasagoodone,mostoftheallowanceaccountwillbeusedupbytheendofthenextaccountingperiod.Theamountremaininginthisaccountattheendoftheyear,whetheradebitoracredit,isagainadjustedtobringtheaccounttotheproperbalancewhenanewestimateismade.,Collectingwritten-offaccounts,Occasionallyanaccountthatwaswrittenofislatercollected.Forexample,TrammelCorporationcollectsa$80accountthatwaswrittenoflastyear.Mar.11AccountsReceivable80AllowanceforUncollectibleAccounts80TorestorePalmersaccountpreviouslywrittenoff.11Cash80AccountsReceivable80CollectedPalmersaccount.,Directwritingoffmethod,Directwritten-offmethod-towriteofftheactualbaddebts_whenanaccountisconsideredtobeuncollectible,thefollowingentrymaybemade:BadDebtsExpense#AccountsReceivable#Towriteoffsomebodysaccount._Noadjustingentrytomadeattheendoftheaccountingperiod.,NotesReceivable,Apromissorynoteisalegaldocumentsignedbythemaker,orborrower,promisingtopaytothelender,orpayee,theprincipalamountofthenoteplusinterestatastatedrate.Anotereceivableisanpromissorynote.(seenextslide),NotesReceivable,Anunconditionalwrittenpromise.Madetherefore,Baylormustmakeupthedifferencetothebank.,DiscountingNotesReceivable:(example),DiscountingNotesReceivable:(example),Dec.31Cash6,039.25NotesReceivable6,000InterestRevenue39.25discountedMendozanoteat10percent,DiscountingNotes:(exerciseforstudents),OnMay30,Apexdiscountsacustomers$25,000noteatthebank.ThenotewasdatedMay1andmaturesin90days.Thenotebearsinterestat12%andthebankchargesadiscountof15%onthematurityvalueofthenote.Preparethejournalentrytorecordthediscountingofthenote.,DiscountingNotes:(answer),6.3-3SellingNotesReceivableCreatesContingentLiabilities,Whenanoteisdiscountedwiththebank,thesellerofthenoteisliabletothebankfortheproceedsonthenotesifthemakerdoesnotpay.Acontingentliabilityarisingfromdiscountingofnotesmustbedisclosedinthefinancialstatements.Thisisusuallyaccomplishedbymeansofafootnoteindicatingtheamountofthediscountednotesandexplainingthatthereisacontingentliabilityforthisamount.Inourexample,ifthemakerofthenotedoesnotpaythebankatmaturity,Beylorwillhavetopaythebank$6,090.BeylormaydiscloseitscontingentliabilityinitsDec.31sbalancesheetthroughsomefootnote.(seetextbook),SellingNotesReceivableCreatesContingentLiabilities,Ifthemakerofthediscountednotedefaultsonthenote,thebankreturnsthenotetotheendorseranddemandspayment.Forourexample,assu