Kế toán doanh nghiệp - Chapter 7: Reporting and analyzing receivables

Financial AccountingJohn J. WildSeventh Edition Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 7Reporting and Analyzing ReceivablesAccounts ReceivableAmounts due from customers for credit sales.Credit sales require:Maintaining a separate account receivable for each customer.Accounting for bad debts that result from credit sales.C17-*With some credit cards and nearly all debit cards, the seller deposits the credit card sales receipts in the bank just like it deposits a customer’s check. The bank increases the balance in the company’s checking account.The company usually pays a fee of 1% to 5% of card sales, for the service.Credit Card SalesC17-* Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. There are two methods of accounting for bad debts:Direct Write-Off MethodAllowance MethodValuing Accounts ReceivableP1/P27-*Matching vs. MaterialityThe matching (expense recognition) principle requires expenses to be reported in the same accounting period as the sales they help produce.The materiality constraint states that an amount can be ignored if its effect on the financial statements is unimportant to users’ business decisions.P17-*At the end of each period, estimate total bad debts expected to be realized from that period’s sales.There are two advantages to the allowance method:It records estimated bad debts expense in the period when the related sales are recorded.It reports accounts receivable on the balance sheet at the estimated amount of cash to be collected.Allowance MethodP27-*Two Methods Percent of Sales Method (Income Statement Method); and Accounts Receivable Methods (Balance Sheet Methods)Percent of Accounts Receivable MethodAging of Accounts Receivable Method.Estimating Bad Debts ExpenseP27-*Estimate based on % of SalesEmphasis on MatchingSalesBad Debts Exp.Income Statement FocusEstimate based on % of ReceivablesEmphasis on Realizable ValueAccts. Rec.All. for Doubtful Accts.Balance Sheet FocusEstimate based on an Aging of ReceivablesEmphasis on Realizable ValueAccts. Rec.All. for Doubtful Accts.Balance Sheet FocusSummary of Allowance Methods:P27-*$1,000.00July 10, 2013Ninety daysBarton Company, Los Angeles, CAOne thousand and no/100 --------------------------------- DollarsFirst National Bank of Los Angeles, CA4212%Julia Browneafter date I promise to pay tothe order of Payable atValue received with interest at per annumNo. Due Oct. 8, 2013TermPayeeMakerNotes ReceivableC2PrincipalInterest RateDue Date7-*Date of noteEnd of Chapter 77-*