{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

chapter_8 - 8 REPORTING AND ANALYZING RECEIVABLES 8-1...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
8-1 REPORTING AND ANALYZING RECEIVABLES Financial Accounting, Sixth Edition 8
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
8-2 Amounts due from individuals and other companies that are expected to be collected in cash. Amounts owed by customers that result from the sale of goods and services. Accounts Receivable Types of Receivables SO 1 Identify the different types of receivables. Claims for which formal instruments of credit are issued as proof of debt. “Nontrade” (interest, loans to officers, advances to employees, and income taxes refundable). Notes Receivable Other Receivables
Background image of page 2
8-3 Two accounting issues: 1. Recognizing accounts receivable. 2. Valuing accounts receivable. Accounts Receivable SO 2 Explain how accounts receivable are recognized in the accounts. u Service organization - records a receivable when it provides service on account. u Merchandiser - records accounts receivable at the point of sale of merchandise on account. Recognizing Accounts Receivable
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
8-4 Illustration: Assume that Jordache Co. on July 1, 2012, sells merchandise on account to Polo Company for $1,000 terms 2/10, n/30. Prepare the journal entry to record this transaction on the books of Jordache Co. Accounts receivable 1,000 Jul. 1 Sales revenue 1,000 Accounts Receivable SO 2 Explain how accounts receivable are recognized in the accounts.
Background image of page 4
8-5 Illustration: On July 5, Polo returns merchandise worth $100 to Jordache Co. Sales returns and allowances 100 Jul. 5 Accounts receivable 100 Illustration: On July 11, Jordache receives payment from Polo Company for the balance due. Cash 882 Jul. 11 Sales discounts ($900 x .02) 18 Accounts receivable 900 Accounts Receivable SO 2 Explain how accounts receivable are recognized in the accounts.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
8-6 Valuing Accounts Receivables u Current asset. u Valuation (net realizable value). Uncollectible Accounts Receivable u Sales on account raise the possibility of accounts not being collected. u Seller records losses that result from extending credit as Bad Debts Expense . Accounts Receivable SO 3 Describe the methods used to account for bad debts.
Background image of page 6
8-7 Allowance Method Losses are estimated: u Better matching. u Receivable stated at net realizable value. u Required by GAAP. Methods of Accounting for Uncollectible Accounts Direct Write-Off Theoretically undesirable: u No matching. u Receivable not stated at net realizable value. u Not acceptable for financial reporting. Valuing Accounts Receivable SO 3 Describe the methods used to account for bad debts.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
8-8 Valuing Accounts Receivable Allowance Method for Uncollectible Accounts 1. Companies estimate uncollectible accounts receivable.
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}