西方财务会计_Chapter6

Chapter6AccountsReceivableAndNotesReceivableIntroductionInadditiontocash,cashequivalents,andshort-terminvestments,thecurrent(liquid)assetsofanentityincludereceivablesthatresultfromcreditsalestocustomers.Thesereceivablesinclude(1)accountsreceivablesand(2)notesreceivable.AccountsReceivableAccountsreceivablearerelativelyliquidasset,usuallyconvertingintocashwithinaperiodof30to60days.Therefore,accountsreceivablefromcustomersareclassifiedascurrentasstsandarelistedinthebalancesheetimmediatelyaftercashandshort-terminvestments.AccountsReceivableThreeImportantConceptsaboutA/R1.CashDiscounts(SalesDiscounts)2.SalesReturnsandAllowances3.BadDebts(UncollectibleAccounts)UncollectibleAccountsWhenacompanygrantscredittoitscustomers,thereusuallyareafewwhodonotpaywhattheypromised.Theaccountsofsuchcustomersarecalleduncollectibleaccountsorbaddebts.Thebaddebtsamountsthatcannotbecollectedisanexpenseofsellingoncredit.Whenthebaddebtexpenseisrecorded,acontraassetaccount–Allowanceforuncollectibleaccountsisestablishedtoreportaccountsreceivableinthebalancesheetattheamountsexpectedtobecollected.UncollectibleAccountsReceivableWhencreditisextended,someamountofuncollectiblereceivablesisgenerallyinevitable.Ifuncollectiblereceivablesareprobableandcanbeestimated,anestimateshouldbemadeoftheamountuncollectibleandrecordedintheperiodinwhichtherevenuewasproduced(allowancemethod).Wecanalsowriteoffuncollectibleaccountsdirectlytoanexpenseaccountifwedon’twanttomaintainanallowanceaccountforaccountsreceivable(directwritingoffmethod)AllowanceMethodWhenweestimatetheamountofouruncollectiblereceivables,wemakethefollowingadjustingentry:GENERALJOURNALPage69DateDescriptionPost.Ref.DebitCreditBadDebtExpense####AllowanceforDoubtfulAccounts####TheAllowanceforDoubtfulAccountsisacontraaccounttoAccountsReceivables.AllowanceMethodAsaccountsbecomeuncollectible,thefollowingentryismade:GENERALJOURNALPage69DateDescriptionPost.Ref.DebitCreditAllowanceforDoubtfulAccounts####AccountsReceivable####ThebalanceintheAllowanceaccountreducesAccountsReceivableontheBalanceSheet.AllowanceMethodIfanaccountpreviouslywrittenoffprovestobecollectibleinasubsequentperiod,thefollowingentriesaremade:GENERALJOURNALPage69DateDescriptionPost.Ref.DebitCreditAccountsReceivable####AllowanceforDoubtfulAccounts####Cash####AccountsReceivable####EstimatingBadDebtsCreditSalesMethodAccountsReceivableMethodAgingofaccountsreceivableEstimatingBadDebts:CreditSalesMethodThismethodemphasizesthematchingprincipleandisconsideredanincomestatementapproach.Anaveragepercentagerelationshipbetweenactualbaddebtlossesandnetcreditsalesisdeterminedbasedonhistoricalinformation.Andthepercentageisappliedtocurrentperiodnetcreditsalestoestimatebaddebtexpensefortheyear.CreditSalesMethodExampleRenco,Inc.EstimateofBadDebtsSalesfor19X92,000,000$Cashsalesduringtheperiod(250,000)Netcreditsales1,750,000Baddebtpercentage1.25%Baddebtexpense21,875$CreditSalesMethodExampleGENERALJOURNALPage69DateDescriptionPost.Ref.DebitCreditDec31BadDebtExpense21,875AllowanceforDoubtfulAccounts21,875AccountsReceivableMethodExampleSingleCompositeRateCrecore,Inc.determinedthatthebalanceintheAllowanceforDoubtfulAccountsshouldbe2.5%ofAccountsReceivable.Atyear-endAccountsReceivablehadabalanceof$191,000,andtheAllowanceaccounthadacreditbalanceof$1,250.PreparetheadjustingentrytorecordBadDebtExpense.AccountsReceivableMethodExampleCrecore,Inc.EstimateofBadDebtExpenseAccountsreceivableatyear-end191,000$Baddebtcompositerate2.50%DesiredAllowancebalance4,775CurrentAllowancebalance(1,250)BadDebtExpense3,525$AccountsReceivableMethodExampleGENERALJOURNALPage69DateDescriptionPost.Ref.DebitCreditDec31BadDebtExpense3,525AllowanceforDoubtfulAccounts3,525TheWayofDisposingBadDebtsWritingoffuncollectibleaccounts(textbook)Duringthefollowingyear,thecompanywillfindthatsomeofitsaccountsarenotcollectible.Whenalleffortstocollectanaccountfail,theaccountiswrittenoff.IfthecompanydecidestowriteoffBaker’s$200past-dueaccount,Feb.6AllowanceforUncollectibleAccounts200AccountsReceivable200Notice:writingoffabaddebtdoesnotaffectowners’equity,nordoesitchangethenetamountofaccountsreceivable.Seepage138Iftheestimateofdoubtfulaccountswasagoodone,mostoftheallowanceaccountwillbeusedupbytheendofthenextaccountingperiod.Theamountremaininginthisaccountattheendoftheyear,whetheradebitoracredit,isagainadjustedtobringtheaccounttotheproperbalancewhenanewestimateismade.Collectingwritten-offaccountsOccasionallyanaccountthatwaswrittenofislatercollected.Forexample,TrammelCorporationcollectsa$80accountthatwaswrittenoflastyear.Mar.11AccountsReceivable80AllowanceforUncollectibleAccounts80TorestorePalmer’saccountpreviouslywrittenoff.11Cash80AccountsReceivable80CollectedPalmer’saccount.DirectwritingoffmethodDirectwritten-offmethod----towriteofftheactualbaddebts___whenanaccountisconsideredtobeuncollectible,thefollowingentrymaybemade:BadDebtsExpense###AccountsReceivable###Towriteoffsomebody’saccount.___Noadjustingentrytomadeattheendoftheaccountingperiod.NotesReceivableApromissorynoteisalegaldocumentsignedbyt