5Short-terminvestments_receivables短期投资和.ppt

Chapter5Short TermInvestments Receivables tcaccounting2013 accounting2013 LearningObjectives Accountforshort terminvestmentsApplyinternalcontrolstoreceivablesUsetheallowancemethodforuncollectiblereceivablesAccountfornotesreceivableUse2newratiostoevaluatefinancialposition KeyTerms CreditorDebtorDebtinstrumentEquitysecurityMaturityTerm Short TermInvestments MarketableSecuritiesinvestmentscompanyplanstoholdoneyearorlessTradingInvestments intentistosellintheshorttermtogenerateprofitsTradingsecuritiesarereportedonthebalancesheetatcurrentmarketvalueUnrealizedgainsandlossesappearontheincomestatement EntryforUnrealizedGain Nov 18Short TermInvestments100 000 Cash100 000 PurchasedInvestment Torecordthepurchaseofshort terminvestments Torecordthereceiptofacashdividendfromshort terminvestments Nov 27Cash4 000 DividendRevenue4 000 Receivedcashdividend EntryforUnrealizedGain Dec31Short TermInvestments2 000 00 UnrealizedGainonInvestments2 000 00 Adjustinvestmenttomarketvalue Torecordthe 2 000increaseinmarketvalueofmarketablesecuritiesheldasshort terminvestments EntryforUnrealizedLoss Dec 31Dr Unrealizedlossoninvestments5 000Cr Short termInvestments5 000 Torecordtheunrealizedlossof 5 000decreasedinmarketvalueofmarketablesecuritiesheldasshort terminvestmen ReportingShort TermInvestments BalanceSheetCurrentAssetsTradinginvestmentsreportedatcurrentmarketvalueIncomeStatementInterestanddividendrevenuereportedunderOtherRevenue GainsandlossesreportedunderOtherRevenue ReportingShort TermInvestments EntryforRealizedGainsandLosses 20 x6Jan 19Dr Cash98 000LossonSaleofInvestments4 000Cr Short termInvestments102 000 TorecordtherealizedLossof 4 000decreasedinmarketvalueofmarketablesecuritiesheldasshort terminvestmen LendingAgreementsandtheCurrentRatio Lendingagreementsoftenrequiretheborrowertomaintainacurrentratioatsomespecifiedlevel say1 5orgreater Thereareseveralstrategiesofincreasingthecurrentratio Receivables Receivablesaremonetaryclaimsagainstothers Twomajortypes Accountsreceivable tradereceivables amountscollectedfromcustomersfromthesaleofgoodsandservicesNotesreceivable writtenpromisetopaysecuredunsecured IssuesWhenExtendingCredit Whatarethebenefitsandcostofextendingcredittocustomers Extendcreditonlytocreditworthycustomers Separatecash handlingandaccountingduties Pursuecollectionfromcustomers IssuesinAccountingforReceivables Measureandreportreceivablesatnetrealizablevalue Measureandreporttheexpenseassociatedwithfailuretocollect Accountingforuncollectiblereceivables Sellingoncreditcreatesbothabenefitandacost Benefit Customerswhocannotpaycashimmediatelycanbuyoncredit sosalesandprofitsincrease Cost Thecompanycannotcollectfromsomecustomers Accountantslabelthiscostuncollectible accountexpense doubtful accountexpense orbad debtexpense UncollectibleReceivables Allowancemethodrecordlossesbasedonanestimateofuncollectibleaccounts SetupAllowanceforuncollectibleaccounts AllowancefordoubtfulaccountsandAllowanceforbaddebts Thisisacontra accounttoAccountReceivable UncollectibleReceivables UncollectibleReceivables AllowancemethodPercent of salesmethodcomputesexpenseasapercentofrevenueincomestatementapproachAging of receivablesmethodindividualreceivablesareanalyzedbasedonhowlongtheyhavebeenoutstandingbalancesheetapproach Percent of Sales Totalsalesare 35 000 Thecreditdepartmentestimatesthatuncollectible accountexpenseis1 oftotalrevenues Dec31Uncollectible AccountExpense 35 000 x 001 35 AllowanceforUncollectibleAccounts35 Recordedexpensefortheyear AccountsReceivable 3 789 Bal 3 789 AllowanceforUncollectibleAccounts 29 35 Bal 64 NetAccountsReceivable 3 789 64 3 725 Aging of Receivables Aging of Receivables Currentbalanceinallowanceaccountis 29 Calculatetheadjustmentneededtobringthebalanceto 64 Expense 64 29 35 Aging of Receivables Dec31Uncollectible AccountExpense35 AllowanceforUncollectibleAccounts35 Recordedexpensefortheyear AccountsReceivable 3 789 Bal 3 789 AllowanceforUncollectibleAccounts 29 35 Bal 64 NetAccountsReceivable 3 789 64 3 725 WritingoffUncollectibleAccounts DecreasetheAllowanceaccountandremovetheaccountreceivable Mar31AllowanceforUncollectibleAccounts12 AccountsReceivable Fiesta9AccountsReceivable Stop N Shop3 Wroteoffuncollectiblereceivables WritingoffUncollectibleAccounts WritingoffUncollectibleAccounts DirectWrite OffMethod Noallowanceisestablishedandtheexpenseisrecognizedwhenaccountsarewrittenoff Mar31UncollectibleAccountExpense12 AccountsReceivable Fiesta9AccountsReceivable Stop N Shop3 Wroteoffbadaccountsbydirectwrite offmethod DirectWrite OffMethod Assetsareoverstatedonthebalancesheetbecausenoallowanceaccountisused Poormatchingofuncollectible accountexpenseagainstrevenue Netincomeisoverstated NotesReceivable Creditorhasanotereceivable Debtorhasanotepayable Interestisrevenuetothelenderandexpensetotheborrower MaturitydateisonwhichthedebtormustpaythenoteMaturityvalueisthesumofprincipalandinterestonthenotePrincipalistheamountborrowed Termisthelengthoftimewhenthenotewassignedbydebtortowhenthedebtormustpaythenote APromissoryNote NotesReceivable LauraHollandsignsa 1 000notedatedAug 31 20X8 Torecordthisonthebank sbooks Aug31NotesReceivable L Holland1 000 Cash1 000 Madealoan AtDec 31 20X8 thebankaccrues9 interestrevenuefor4asfollows Dec31InterestReceivable 1 000 x 09x4 12 30 InterestRevenue30 Accruedinterestrevenue NotesReceivable TorecordcollectionofthenoteonFeb 28 20X9 Feb28Cash1 045 InterestRevenue 1 000 09 2 12 15 Collectednoteatmaturity InterestReceivable30 NoteReceivable L Holland1 000 SpeedingUpCashFlow CreditCardorBankcardSalesSellingReceivablesBothmethodsresultinfinancingexpense AcidTestRatio MeasureofliquidityMorestringentthanthecurrentratio Acid testratio Cash Short terminvestments Netcurrentreceivables Totalcurrentliabilities Days SalesinReceivables Computeoneday ssales netsales 365days Computedays salesinreceivables averagereceivables oneday ssales EXERCISE TRUE FALSE Marketablesecuritiesareinvestmentsthatacompanyisactivelyattemptingtosell FalseShort terminvestmentsmaybedividedintoheld to maturitysecurities tradingsecurities andavailable for sale investments true EXERCISE TRUE FALSE Tradingsecuritiesareconsideredtobecurrentassets TrueTradingsecuritiesarereportedonthebalancesheetattheirhistoricalcost false EXERCISE TRUE FALSE Realizedgainsandlossesarecomputedbycomparingcashreceivedatthetimeofsaletotheoriginalcostoftheassets FalseUnrealizedgainsandlossesontradingsecuritiesarereportedaspartofcurrentincome true EXERCISE TRUE FALSE Notesreceivablecollectedininstallmentscanappearonabalancesheetasbothacurrentassetandalong termasset TrueTradereceivablesareamountstobecollectedfromcustomersfromthesaleofgoodsandservices true EXERCISE TRUE FALSE Subsidiaryrecordsprovidedetailedinformationaboutcontrolaccounts TrueUndertheallowancemethod theentrytorecordtheestimatedbaddebtsfortheperiodincludesacredittoAccountsReceivable false EXERCISE TRUE FALSE AllowanceforDoubtfulAccountsisusedtorecordthebaddebtsexpensefortheperiod FalseTheallowancemethodofaccountingforbaddebtsrecordscollectionlossesonthebasisofestimatesratherthanwaitingtodeterminewhichcustomerswillnotpay true EXERCISE TRUE FALSE Undertheallowancemethod theentrytowriteoffanaccountthathasbeendeemeduncollectiblehasnoimpactonthenetincomeofthefirm TrueWhenpreparingfinancialstatements thedirectwrite offmethodispreferredovertheallowancemethodbecauseitismoreaccurate false EXERCISE TRUE FALSE Therearetwobasicwaystoestimateuncollectibles thepercent of salesmethodandtheaging of receivablesmethod TrueThematurityvalueofanoteisthesumoftheprincipalamountofanoteplustheinterestdueatmaturity true EXERCISE TRUE FALSE Thepayeeofthenoterecordsinterestonanotereceivableasinterestexpense FalseAnotereceivableissoldbeforeitsmaturitydateforlessthanitsoriginalissuevalue false EXERCISE TRUE FALSE Tradereceivablescanbesoldtoafactorasameansofspeedingcashflow TrueIngeneral companiespreferalongercollectionperiodforreceivables false EXERCISE TRUE FALSE Becauseitincludesonlycashandshort terminvestmentsinthenumerator theacid testratioisamorestringentmeasureofafirm sabilitytopaycurrentliabilitiesthanthecurrentratio false Exercise Choice Tradingsecurities a mustbedebtsecuritiesb mustbeequitysecuritiesc maybedebtsecuritiesorequitysecuritiesd representAccountsReceivableandNotesReceivableonthebalancesheetC Alltradingsecuritiesareclassifiedas a available for salesecuritiesb currentassetsc long termassetsd equitysecuritiesb Tradingsecuritiesarereportedonthebalancesheetat a amortizedcostb originalpurchasepricec currentmarketvalued historicalcostadjustedforinvestmentincomec Unrealizedgainsorlossesontradingsecuritiesarereportedonthe a balancesheetb incomestatementc statementofcashflowsd arenotreportedonanyfinancialstatementb Anunrealizedlossonamarketablesecuritymeansthat a thevalueofthesecurityatthetimeofsaleexceededthehistoricalcostofthesecurityb thecurrentmarketvalueofthesecurityexceedsitsoriginalcostc theoriginalpurchasepriceofthesecurityexceededthehistoricalcostd thehistoricalcostofthesecurityexceedsitscurrentmarketvalued Tradingsecuritiespurchasedfor 200 000werevaluedat 206 000attheendoftheyear Theadjustingentrytorecordthisdifferenceincludedacreditto a RetainedEarningsb UnrealizedGainonInvestmentsc Short termInvestmentsd Noadjustingentryisrequired b Tradingsecuritiespurchasedin2006for 100 000werevaluedat 95 000onDecember31 2006 Thesecuritiesweresoldatthebeginningof2007for 98 000 The2007incomestatementshouldreporta a realizedlossof 2 000b realizedgainof 3 000c unrealizedlossof 5 000andarealizedgainof 3 000d unrealizedgainrecoveredof 3 000b OnDecember31 2005 installmentnotesreceivabletotaled 20 000 Ofthisamount 6 000willbecollectedin2006 Theremainderwillbecollectedin2007 Howshouldthesenotesbeclassifiedonthebalancesheet a Currentassetsare 6 000andlong termassetsare 14 000 b Currentassetsare 20 000andlong termassetsare 0 c Currentassetsare 0andlong termassetsare 20 000 d Currentassetsare 6 000andlong termassetsare 20 000 a Thetwoacceptedmethodsofrecordingbaddebtsarethe a allowancemethodandtheagingmethodb receivablesmethodandtheagingmethodc allowancemethodandthedirectwrite offmethodd directwrite offmethodandthepercentage of salesmethod c Thetwomethodsofestimatinguncollectiblereceivablesarethe a allowancemethodandthedirectwrite offmethodb percentofsalesmethodandtheaging of receivablesmethodc percentofsalesmethodandthedirectwrite offmethodd aging of receivablesmethodanddirectwrite offmethod b Thenetrealizablevalueofaccountsreceivableisthe a amountremainingafteruncollectibleaccountsarewrittenoffb amountowedbycustomersaftersalesreturnsandallowancesandsalesdiscountsarepostedc amountthecompanyexpectstocollectfromcustomersd amountthecompanycancollectfromafactorwhenthereceivablesaresold c Undertheallowancemethodforestimatinguncollectibleaccounts theentrytowriteoffanaccount a reducestotalassetsb reducesnetincomec hasnoeffectontotalassetsornetincomed increasesnetincome c Underthepercentage of salesmethod theestimateofbaddebtsfortheperiod a isbasedonthebalanceintheAccountsReceivableaccountb isbasedonagingaccountsreceivablec isbasedonapercentageofnetcreditsalesd isbasedonapercentageofnetaccountsreceivable c Ayear endreviewofaccountsreceivableandestimateduncollectiblepercentagesrevealedthefollowing 1 30days 24 0002 31 60day