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Unformatted text preview: es that are expected to be collected in cash.
Amounts owed by customers that result from the sale of goods and services. 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). Accounts
8-4 SO 1 Identify the different types of receivables. Accounts Receivable
Two accounting issues:
1. Recognizing accounts receivable.
2. Valuing accounts receivable.
Recognizing Accounts Receivable
A service organization records a receivable when it provides service on account. A merchandiser
records accounts receivable at the point of sale of merchandise on account. Chapter
8-5 SO 2 Explain how accounts receivable are recognized in the accounts.
SO Accounts Receivable
Illustration: Assume that you use your JCPenney Company credit card to purchase clothing with a sales price of $300. Assuming that you owe $300 at the end of the month, and JCPenney charges 1.5% per month on the balance due. Prepare the entry for JC Penney to record the sale and the adjusting entry to record interest revenue.
Accounts receivable 300.00 Sales 300.00 Accounts receivable
Interest revenue (300 x 1.5%)
4.50 SO 2 Explain how companies recognize accounts receivable. Accounts Receivable
Accounts Receivable Valuing Accounts Receivables
Valuation (net realizable value)
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This document was uploaded on 12/18/2013.
- Fall '13