ch09 - CHAPTER 9 Accounting for Receivables STUDY...

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CHAPTER 9 Accounting for Receivables STUDY OBJECTIVES 1. IDENTIFY THE DIFFERENT TYPES OF RECEIV- ABLES. 2. EXPLAIN HOW ACCOUNTS RECEIVABLE ARE RECOGNIZED IN THE ACCOUNTS. 3. DISTINGUISH BETWEEN THE METHODS AND BASES USED TO VALUE ACCOUNTS RECEIVABLE. 4. DESCRIBE THE ENTRIES TO RECORD THE DISPOSITION OF ACCOUNTS RECEIVABLE. 5. COMPUTE THE MATURITY DATE OF AND INTEREST ON NOTES RECEIVABLE. 6. EXPLAIN HOW NOTES RECEIVABLE ARE RE- COGNIZED IN THE ACCOUNTS. 7. DESCRIBE HOW NOTES RECEIVABLE ARE VALUED. 8. DESCRIBE THE ENTRIES TO RECORD THE DISPOSITION OF NOTES RECEIVABLE. 9. EXPLAIN THE STATEMENT PRESENTATION AND ANALYSIS OF RECEIVABLES. 9-1
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CHAPTER REVIEW Types of Receivables 1. (S.O. 1) Receivables are claims that are expected to be collected in cash. The three major classes of receivables are usually classified as: (a) accounts, (b) notes, and (c) other. 2. Accounts receivable are amounts owed by customers on account. Notes receivable rep- resent claims for which formal instruments of credit are issued as evidence of debt. And oth- er receivables include nontrade receivables such as interest receivable, loans to company officers, advances to employees, and income taxes refundable. Recognizing Accounts Receivable 3. (S.O. 2) When a business sells merchandise to a customer on credit, Accounts Receivable is debited and Sales is credited. 4. If a payment is received by a customer within the discount period, the following entry is made: Cash. .......................................................................................... XXX Sales Discounts. ........................................................................ XXX Accounts Receivable. ........................................................... XXX Valuing Accounts Receivable 5. (S.O. 3) To ensure that receivables are not overstated on the balance sheet, they are stated at their cash (net) realizable value. Cash (net) realizable value is the net amount expected to
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This note was uploaded on 01/27/2010 for the course MGT 011A taught by Professor Hancock,john during the Spring '07 term at UC Davis.

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ch09 - CHAPTER 9 Accounting for Receivables STUDY...

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