AccountingforReceivablesChapter9AccountingforReceivablesChapAccountsReceivableC1Areceivableisanamountduefromanotherparty.Acompanymustalsomaintainaseparateaccountforeachcustomerthattrackshowmuchthatcustomerpurchases,hasalreadypaid,andstillowes.Thisgraphshowsrecentdollaramountsofreceivablesandtheirpercentoftotalassetsforfourwell-knowncompanies.AccountsReceivableC1AreceivaSalesonCreditC1OnJuly1,TechComhadacreditsaleof$950toCompStoreandacollectionof$720fromRDAElectronicsfromapriorcreditsale.SalesonCreditC1OnJuly1,TeSalesonCreditC1SalesonCreditC1CreditCardSalesAdvantagesofallowingcustomerstousecreditcards:Customers’credit信用isevaluatedbythecreditcardissuer.Therisksofextendingcreditaretransferredtothecreditcardissuer.Cashcollectionsarequicker.Salesincreasebyprovidingpurchaseoptionstothecustomer.C1CreditCardSalesAdvantagesofCreditCardSalesC1OnJuly15,TechComhas$100ofcreditcardsaleswitha4%fee,andits$96cashisreceivedimmediatelyondeposit.CreditCardSalesC1OnJuly15,CreditCardSalesC1IfinsteadTechCommustremitelectronicallythecreditcardsalesreceiptstothecreditcardcompanyandwaitforthe$96cashpayment,wewillmakethefirstentryonJuly15,andthesecondentryonJuly20,whenthecashisreceived.CreditCardSalesC1IfinsteadAmountsowedbycustomersfromcreditsalesforwhichpaymentisrequiredinperiodicamountsoveranextendedtimeperiod.Thecustomerisusuallychargedinterest.C1FordMotorCompanyreportsmorethan$70billionininstallmentreceivables.InstallmentAccountsReceivable

分期付款的應(yīng)收帳款A(yù)mountsowedbycustomersfromValuingAccountsReceivableP1Therearetwomethodsofaccountingforbaddebts:DirectWrite-OffMethod直接沖銷(xiāo)法AllowanceMethod備抵法Somecustomersmaynotpaytheiraccount.Uncollectibleamountsarereferredtoasbaddebts.ValuingAccountsReceivableP1TDirectWrite-OffMethodP1TechComdeterminesonJanuary23thatitcannotcollect$520owedtoitbyitscustomerJ.Kent.Noticethatthespecificcustomerisnotedinthetransactionsowecanmaketheproperentryinthecustomer’sAccountsReceivablesubsidiaryledger.DirectWrite-OffMethodP1TechCDirectWrite-OffMethod–

RecoveringaBadDebtOnMarch11,J.KentwasabletomakefullpaymenttoTechComfortheamountpreviouslywritten-off.P1DirectWrite-OffMethod–

RecoMatchingvs.MaterialityP1Thedirectwrite-offmethodusuallydoesnotbestmatchsalesandexpenses.Thematching(expenserecognition)principlerequiresexpensestobereportedinthesameaccountingperiodasthesalestheyhelpedproduce.Materialitystatesthatanamountcanbeignoredifitseffectonthefinancialstatementsisunimportanttousers’businessdecisions.Matchingvs.MaterialityP1TheAllowanceMethodTwoadvantagestotheallowancemethod:Itrecordsestimatedbaddebtsexpenseintheperiodwhentherelatedsalesarerecorded.Itreportsaccountsreceivableonthebalancesheetattheestimatedamountofcashtobecollected.Attheendofeachperiod,estimatetotalbaddebtsexpectedtoberealizedfromthatperiod’ssales.P1AllowanceMethodTwoadvantagesRecordingBadDebtsExpenseTechComhadcreditsalesof$300,000duringitsfirstyearofoperations.Attheendofthefirstyear,$20,000ofcreditsalesremaineduncollected.Basedontheexperienceofsimilarbusinesses,TechComestimatedthat$1,500ofitsaccountsreceivablewouldbeuncollectible.P1RecordingBadDebtsExpenseTecBalanceSheetPresentationTechComhadcreditsalesof$300,000duringitsfirstyearofoperations.Attheendofthefirstyear,$20,000ofcreditsalesremaineduncollected.Basedontheexperienceofsimilarbusinesses,TechComestimatedthat$1,500ofitsaccountsreceivablewouldbeuncollectible.P1BalanceSheetPresentationTechWritingOffaBadDebtTechComhasdeterminedthatJ.Kent’s$520accountisuncollectible.P1WritingOffaBadDebtTechComWritingOffaBadDebtThewrite-offdoesnotaffecttherealizablevalueofaccountsreceivable.P1WritingOffaBadDebtThewritRecoveringaBadDebtOnMarch11,Kentpaysinfullhis$520accountpreviouslywrittenoff.Tohelprestorecreditstanding,acustomersometimesvolunteerstopayallorpartoftheamountowedonanaccountevenafterithasbeenwrittenoff.P1RecoveringaBadDebtOnMarchEstimatingBadDebtsExpenseTwoMethods

PercentofSalesMethod銷(xiāo)售額比例法AccountsReceivableMethods應(yīng)收帳款法PercentofAccountsReceivable應(yīng)收帳款比例法AgingofAccountsReceivable應(yīng)收帳款帳齡分析法P2EstimatingBadDebtsExpenseTwPercentofSalesMethodBaddebtsexpenseiscomputedasfollows:P2PercentofSalesMethodBaddebMusicland’saccountantcomputesestimatedBadDebtsExpenseof$2,400.PercentofSalesMethodP2Musiclandhascreditsalesof$400,000in2013.Itisestimatedthat0.6%ofcreditsaleswilleventuallyproveuncollectible.Let’slookatrecordingBadDebtsExpensefor2013.Musicland’saccountantcomputePercentofReceivablesMethodComputetheestimateoftheAllowanceforDoubtfulAccounts.

BadDebtsExpenseiscomputedas:TotalEstimatedBadDebtsExpense

–PreviousBalanceinAllowanceAccount=CurrentBadDebtsExpense

P2PercentofReceivablesMethodCP2Musiclandhas$50,000inaccountsreceivableanda$200creditbalanceinAllowanceforDoubtfulAccountsonDecember31,2013.Pastexperiencesuggeststhat5%ofreceivablesareuncollectible.DesiredbalanceinAllowanceforDoubtfulAccounts.PercentofReceivablesMethodP2Musiclandhas$50,000inaccEachagegroupismultipliedbyitsestimatedbaddebtspercentage.Estimatedbaddebtsforeachgrouparetotaled.AgingofReceivablesMethodP2Classifyeachreceivablebyhow

longitispastdue.EachagegroupismultipliedbAgingofAccountsReceivableP2AgingofAccountsReceivableP2Musiclandhasanunadjustedcreditbalanceof$200intheallowanceaccount.Weestimatedtheproperbalancetobe$2,270.AgingofAccountsReceivableP2MusiclandhasanunadjustedcrSummaryofMethodsP2SummaryofMethodsP2NotesReceivableC2Apromissorynoteisawrittenpromisetopayaspecifiedamountofmoney,usuallywithinterest,eitherondemandoratadefinitefuturedate.NotesReceivableC2ApromissoryComputingMaturityandInterestThenoteisdueandpayableonOctober8.C2OnJuly10,TechComreceiveda$1,000,90-day,12%promissorynoteasaresultofasaletoJuliaBrowne.Thematuritydateofanoteisthedaythenote(principalandinterest)mustberepaid.ComputingMaturityandInteresIfthenoteisexpressedindays,baseayearon360daysusingthe“banker’srule.”Evenformaturitieslessthanoneyear,therateisannualized.InterestComputationC2IfthenoteisexpressedindaRecognizingNotesReceivableC2Toillustratetherecordingforthereceiptofanote,weusethe$1,000,90-day,12%promissorynotefromJuliaBrownetoTechCom.TechComreceivedthisnoteatthetimeofaproductsaletoJuliaBrowne.NotesreceivableareusuallyrecordedinasingleNotesReceivableaccounttosimplifyrecordkeeping.Theoriginalnotesarekeptonfile,includinginformationonthemaker,rateofinterest,andduedate.RecognizingNotesReceivableC2RecordinganHonoredNoteP3Theprincipalandinterestofanotearedueonitsmaturitydate.J.Cookhasa$600,15%,60-daynotereceivableduetoTechComonDecember4.RecordinganHonoredNoteP3TheRecordingaDishonoredNoteTechComholdsan$800,12%,60-daynoteofGregHart.Atmaturity,October14,Hartdishonorsthenote.P3Theactofdishonoringanotedoesnotrelievethemakeroftheobligationtorepaytheprincipalandinterestdue.RecordingaDishonoredNoteTecRecordingEnd-of-Period

InterestAdjustmentsOnDecember16,TechComacceptsa$3,000,60-day,12%notefromacustomeringrantinganextensiononapast-dueaccount.WhenTechCom’saccountingperiodendsonDecember31,$15ofinteresthasaccruedonthenote.P3$3,000x12%x15/360=$15RecordingEnd-of-Period

InterRecordingEnd-of-Period

InterestAdjustmentsRecordingcollectiononnoteatmaturity.P3$3,000x12%x60/360=$60RecordingEnd-of-Period

InterDisposalofReceivablesC3Companiescanconvertreceivablestocashbeforetheyaredue.SellingReceivablesPledgingReceivablesDisposalofReceivablesC3CompaGlobalViewValuingofReceivablesBothU.S.GAAPandIFRSrequirethatreceivablesbereportednetofestimateduncollectibles.Further,bothsystemsrequirethattheexpenseforestimateduncollectiblesberecordedinthesameperiodwhenanyrevenuesfromthosereceivablesarerecorded.RecognitionofReceivablesBothU.S.GAAPandIFRShavesimilarassetcriteriathatapplytorecognitionofreceivables.Further,receivablesthatarisefromrevenue-generatingactivitiesaresubjecttobroadlysimilarcriteriaforU.S.GAAPandIFRS.DispositionofReceivablesBothU.S.GAAPandIFRSapplybroadlysimilarrulesinrecordingdispositionsofreceivables.GlobalViewValuingofReceivabAccountsReceivableTurnoverThisratioprovidesusefulinformationforevaluatinghowefficientmanagementhasbeeningrantingcredittoproducerevenue.NetsalesAverageaccountsreceivable,netA1AccountsReceivableTurnoverEndofChapter9EndofChapter9AccountingforReceivablesChapter9AccountingforReceivablesChapAccountsReceivableC1Areceivableisanamountduefromanotherparty.Acompanymustalsomaintainaseparateaccountforeachcustomerthattrackshowmuchthatcustomerpurchases,hasalreadypaid,andstillowes.Thisgraphshowsrecentdollaramountsofreceivablesandtheirpercentoftotalassetsforfourwell-knowncompanies.AccountsReceivableC1AreceivaSalesonCreditC1OnJuly1,TechComhadacreditsaleof$950toCompStoreandacollectionof$720fromRDAElectronicsfromapriorcreditsale.SalesonCreditC1OnJuly1,TeSalesonCreditC1SalesonCreditC1CreditCardSalesAdvantagesofallowingcustomerstousecreditcards:Customers’credit信用isevaluatedbythecreditcardissuer.Therisksofextendingcreditaretransferredtothecreditcardissuer.Cashcollectionsarequicker.Salesincreasebyprovidingpurchaseoptionstothecustomer.C1CreditCardSalesAdvantagesofCreditCardSalesC1OnJuly15,TechComhas$100ofcreditcardsaleswitha4%fee,andits$96cashisreceivedimmediatelyondeposit.CreditCardSalesC1OnJuly15,CreditCardSalesC1IfinsteadTechCommustremitelectronicallythecreditcardsalesreceiptstothecreditcardcompanyandwaitforthe$96cashpayment,wewillmakethefirstentryonJuly15,andthesecondentryonJuly20,whenthecashisreceived.CreditCardSalesC1IfinsteadAmountsowedbycustomersfromcreditsalesforwhichpaymentisrequiredinperiodicamountsoveranextendedtimeperiod.Thecustomerisusuallychargedinterest.C1FordMotorCompanyreportsmorethan$70billionininstallmentreceivables.InstallmentAccountsReceivable

分期付款的應(yīng)收帳款A(yù)mountsowedbycustomersfromValuingAccountsReceivableP1Therearetwomethodsofaccountingforbaddebts:DirectWrite-OffMethod直接沖銷(xiāo)法AllowanceMethod備抵法Somecustomersmaynotpaytheiraccount.Uncollectibleamountsarereferredtoasbaddebts.ValuingAccountsReceivableP1TDirectWrite-OffMethodP1TechComdeterminesonJanuary23thatitcannotcollect$520owedtoitbyitscustomerJ.Kent.Noticethatthespecificcustomerisnotedinthetransactionsowecanmaketheproperentryinthecustomer’sAccountsReceivablesubsidiaryledger.DirectWrite-OffMethodP1TechCDirectWrite-OffMethod–

RecoveringaBadDebtOnMarch11,J.KentwasabletomakefullpaymenttoTechComfortheamountpreviouslywritten-off.P1DirectWrite-OffMethod–

RecoMatchingvs.MaterialityP1Thedirectwrite-offmethodusuallydoesnotbestmatchsalesandexpenses.Thematching(expenserecognition)principlerequiresexpensestobereportedinthesameaccountingperiodasthesalestheyhelpedproduce.Materialitystatesthatanamountcanbeignoredifitseffectonthefinancialstatementsisunimportanttousers’businessdecisions.Matchingvs.MaterialityP1TheAllowanceMethodTwoadvantagestotheallowancemethod:Itrecordsestimatedbaddebtsexpenseintheperiodwhentherelatedsalesarerecorded.Itreportsaccountsreceivableonthebalancesheetattheestimatedamountofcashtobecollected.Attheendofeachperiod,estimatetotalbaddebtsexpectedtoberealizedfromthatperiod’ssales.P1AllowanceMethodTwoadvantagesRecordingBadDebtsExpenseTechComhadcreditsalesof$300,000duringitsfirstyearofoperations.Attheendofthefirstyear,$20,000ofcreditsalesremaineduncollected.Basedontheexperienceofsimilarbusinesses,TechComestimatedthat$1,500ofitsaccountsreceivablewouldbeuncollectible.P1RecordingBadDebtsExpenseTecBalanceSheetPresentationTechComhadcreditsalesof$300,000duringitsfirstyearofoperations.Attheendofthefirstyear,$20,000ofcreditsalesremaineduncollected.Basedontheexperienceofsimilarbusinesses,TechComestimatedthat$1,500ofitsaccountsreceivablewouldbeuncollectible.P1BalanceSheetPresentationTechWritingOffaBadDebtTechComhasdeterminedthatJ.Kent’s$520accountisuncollectible.P1WritingOffaBadDebtTechComWritingOffaBadDebtThewrite-offdoesnotaffecttherealizablevalueofaccountsreceivable.P1WritingOffaBadDebtThewritRecoveringaBadDebtOnMarch11,Kentpaysinfullhis$520accountpreviouslywrittenoff.Tohelprestorecreditstanding,acustomersometimesvolunteerstopayallorpartoftheamountowedonanaccountevenafterithasbeenwrittenoff.P1RecoveringaBadDebtOnMarchEstimatingBadDebtsExpenseTwoMethods

PercentofSalesMethod銷(xiāo)售額比例法AccountsReceivableMethods應(yīng)收帳款法PercentofAccountsReceivable應(yīng)收帳款比例法AgingofAccountsReceivable應(yīng)收帳款帳齡分析法P2EstimatingBadDebtsExpenseTwPercentofSalesMethodBaddebtsexpenseiscomputedasfollows:P2PercentofSalesMethodBaddebMusicland’saccountantcomputesestimatedBadDebtsExpenseof$2,400.PercentofSalesMethodP2Musiclandhascreditsalesof$400,000in2013.Itisestimatedthat0.6%ofcreditsaleswilleventuallyproveuncollectible.Let’slookatrecordingBadDebtsExpensefor2013.Musicland’saccountantcomputePercentofReceivablesMethodComputetheestimateoftheAllowanceforDoubtfulAccounts.

BadDebtsExpenseiscomputedas:TotalEstimatedBadDebtsExpense

–PreviousBalanceinAllowanceAccount=CurrentBadDebtsExpense

P2PercentofReceivablesMethodCP2Musiclandhas$50,000inaccountsreceivableanda$200creditbalanceinAllowanceforDoubtfulAccountsonDecember31,2013.Pastexperiencesuggeststhat5%ofreceivablesareuncollectible.DesiredbalanceinAllowanceforDoubtfulAccounts.PercentofReceivablesMethodP2Musiclandhas$50,000inaccEachagegroupismultipliedbyitsestimatedbaddebtspercentage.Estimatedbaddebtsforeachgrouparetotaled.AgingofReceivablesMethodP2Classifyeachreceivablebyhow

longitispastdue.EachagegroupismultipliedbAgingofAccountsReceivableP2AgingofAccountsReceivableP2Musiclandhasanunadjustedcreditbalanceof$200intheallowanceaccount.Weestimatedtheproperbalancetobe$2,270.AgingofAccountsReceivableP2MusiclandhasanunadjustedcrSummaryofMethodsP2SummaryofMethodsP2NotesReceivableC2Apromissorynoteisawrittenpromisetopayaspecifiedamountofmoney,usuallywithinterest,eitherondemandoratadefinitefuturedate.NotesReceivableC2ApromissoryComputingMaturityandInterestThenoteisdueandpayableonOctober8.C2OnJuly10,TechComreceiveda$1,000,90-day,12%promissorynoteasaresultofasaletoJuliaBrowne.Thematuritydateofanoteisthedaythenote(principalandinterest)mustberepaid.ComputingMaturityandInteresIfthenoteisexpressedindays,baseayearon360daysusingthe“banker’srule.”Evenformaturitieslessthanoneyear,therateisannualized.InterestComputationC2IfthenoteisexpressedindaRecognizingNotesReceivableC2Toillustratetherecordingforthereceiptofanote,weusethe$1,000,90-day,12%promissorynotefromJuliaBrownetoTechCom.TechComreceivedthisnoteatthetimeofaproductsaletoJuliaBrowne.NotesreceivableareusuallyrecordedinasingleNotesReceivableaccounttosimplifyrecordkeeping.Theoriginalnotesarekeptonfile,includinginformationonthemaker,rateofinterest,andduedate.RecognizingNotesReceivableC2RecordinganHonoredNoteP3Theprincipalandinterestofanotearedueonitsmaturitydate.J.Cookhasa$600,15%,60-daynotereceivableduetoTechComonDecember4.Recordin