Chap007wildtextbook(1)

Recovery of a bad debt 7 28 dr cr feb 8 accounts

Info icon This preview shows pages 28–39. Sign up to view the full content.

View Full Document Right Arrow Icon
Recovery of a Bad Debt 7-28 DR CR Feb. 8 Accounts Receivable - Martin 300 Allowance for Doubtful Accounts 300 To reinstate account previously written off Feb. 8 Cash 300 Accounts Receivable - Martin 300 To record full payment on account
Image of page 28

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

View Full Document Right Arrow Icon
% of Sales Emphasis on Matching Sales Bad Debts Exp. Income Statement Focus % of Receivables Emphasis on Realizable Value Accts. Rec. All. for Doubtful Accts. Balance Sheet Focus Aging of Receivables Emphasis on Realizable Value Accts. Rec. All. for Doubtful Accts. Balance Sheet Focus Summary 7-29
Image of page 29
Installment Accounts Receivable Amounts owed by customers from credit sales for which payment is required in periodic amounts over an extended time period. The customer is usually charged interest. 7-30
Image of page 30

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

View Full Document Right Arrow Icon
$1,000.00 July 10, 2011 Ninety days Barton Company, Los Angeles, CA One thousand and no/100 --------------------------------- Dollars First National Bank of Los Angeles, CA 42 12% Julia Browne after    date I promise to pay to the order of  Payable at Value received with interest at                     per annum No.              Due  Oct. 8, 2011 Term Payee Maker Notes Receivable Principal Interest Rate Due Date 7-31
Image of page 31
Or months. Even for maturities less than one year, the rate is annualized. Interest Computation 7-32 Principal of the note × Annual interest rate × Time expressed in years = Interest
Image of page 32

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

View Full Document Right Arrow Icon
On March 1, 2011, Matrix, Inc. purchased a copier for $12,000 from Office Supplies, Inc. Matrix gave Office Supplies a 9% note due in 3 months in payment for the copier. What is the maturity date of the note? Computing Maturity and Interest 7-33
Image of page 33
Computing Maturity and Interest The note is due and payable on June 1, 2011. How much interest will Matrix pay to Office Supplies, Inc. on this note? 7-34
Image of page 34

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

View Full Document Right Arrow Icon
Total interest due at June 1. Computing Maturity and Interest Principal of the note × Annual interest rate × Time expressed in months = Interest $ 12,000 × 9% × 3/12 = $ 270 7-35
Image of page 35
Recognizing Notes Receivable Here are the entries to record the note on March 1, and the settlement on June 1, 2011. 7-36 DR CR Mar. 1 Notes Receivable 12,000 Sales 12,000 Sold goods in exchange for note DR CR Jun 1 Cash 12,270 Interest Revenue 270 Notes Receivable 12,000 Collected note and interest due
Image of page 36

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

View Full Document Right Arrow Icon
Recording End-of-Period Interest Adjustments On December 1, 2011, Matrix, Inc. purchased a copier for $12,000 from Office Supplies, Inc. Matrix issued a 9% note due in 3 months in payment for the copier. What adjusting entry is required on December 31, the end of the company’s accounting period? $12,000 × 9% × 1/12 = $90 7-37 DR CR Dec. 31 Interest Receivable 90 Interest Revenue 90 To accrue interest on note
Image of page 37
Recording End-of-Period Interest Adjustments Recording collection on note at maturity. 7-38 DR CR Mar. 1 Cash 12,270 Interest Receivable 90 Interest Revenue 180 Notes Receivable 12,000 To record full payment of note
Image of page 38

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

View Full Document Right Arrow Icon
This ratio provides useful information for evaluating how efficient management has been in granting credit to produce revenue. Net sales Average accounts receivable, net Accounts Receivable Turnover 7-39 Accounts receivable turnover =
Image of page 39
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern