Chap会计学基础学习教案

1、FINANCIAL ASSETSChapter7第1页/共63页第一页，共64页。How Much Cash Should a Business Have?$Every business needs enough cash to pay its bills!第2页/共63页第二页，共64页。How Much Cash Should a Business Have?CashShort-term InvestmentsReceivablesFinancial Assets第3页/共63页第三页，共64页。How Much Cash Should a Business Have?Accountsre

2、ceivableMarketable securities (short-term investments)Cash (and cash equivalents)Collections from customersCash payments“Excess” cash is invested temporarilyInvestments are sold as cash is needed第4页/共63页第四页，共64页。The Valuation of Financial AssetsEstimated collectible amount第5页/共63页第五页，共64页。CashCoins

3、and paper moneyChecksMoney ordersTravelers checksBank credit card salesCash is defined as any deposit banks will accept.第6页/共63页第六页，共64页。Combined with cash on balance sheetReporting Cash in the Balance SheetLiquid short-term investmentsStable market valuesMatures within 90 days of acquisitionCash Eq

4、uivalents第7页/共63页第七页，共64页。Not available for paying current liabilitiesReporting Cash in the Balance SheetNot a current assetListed as an investment“Restricted” Cash第8页/共63页第八页，共64页。Bank agrees in advance to lend money.Reporting Cash in the Balance SheetLiability is incurred when line of credit is us

5、ed.Unused line of credit is disclosed in notes.Lines of Credit第9页/共63页第九页，共64页。The Statement of Cash FlowsSummarizes cash transactions for an accounting period.Statement of Cash FlowsIncludes cash and cash equivalents.第10页/共63页第十页，共64页。Cash ManagementlAccurately account for cash.lPrevent theft and f

6、raud.lAssure the availability of adequate amounts of cash.lAvoid unnecessarily large amounts of idle cash.第11页/共63页第十一页，共64页。Using Excess Cash Balances EfficientlyCash available for long-term investment may be used to finance growth and expansion of the business, or to repay debt.Cash not needed for

7、 business purposes should be distributed to the companys stockholders.第12页/共63页第十二页，共64页。Internal Control Over CashlSegregate authorization, custody and recording of cash. lPrepare a cash budget.lPrepare a control listing of cash receipts.lRequire daily deposits.lMake all payments by check.lVerify e

8、very expenditure before payment.lPromptly reconcile bank statements.第13页/共63页第十三页，共64页。Cash Over and ShortGENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditMay5 Cash10Cash Over and Short10Cash Over and Short is debited for shortages and credited for overages.On May 5, XBAR, Inc.s cash d

9、rawer was counted and found to be $10 over.第14页/共63页第十四页，共64页。Bank StatementsShows the beginning bank balance, deposits made, checks paid, other debits and credits in the month, and the ending bank balance. Bank Statement第15页/共63页第十五页，共64页。Reconciling the Bank StatementExplains the difference betwee

10、n cash reported on bank statement and cash balance in depositors accounting records.Provides information for reconciling journal entries.第16页/共63页第十六页，共64页。Reconciling the Bank Statement Balance per Bank+ Deposits in Transit- Outstanding Checks Bank Errors= Adjusted Balance Balance per Depositor+ De

11、posits by Bank (credit memos)- Service Charge - NSF Checks Book Errors= Adjusted Balance第17页/共63页第十七页，共64页。Reconciling the Bank StatementAll reconciling items on the book side require an adjusting entry to the cash account. Balance per Depositor+ Deposits by Bank (credit memos)- Service Charge - NSF

12、 Checks Book Errors= Adjusted Balance第18页/共63页第十八页，共64页。Reconciling the Bank StatementPrepare a July 31 bank reconciliation statement and the resulting journal entries for the Simmons Company. The July 31 bank statement indicated a cash balance of $9,610, while the cash ledger account on that date s

13、hows a balance of $7,430.Additional information necessary for the reconciliation is shown on the next page.第19页/共63页第十九页，共64页。lOutstanding checks totaled $2,417.lA $500 check mailed to the bank for deposit had not reached the bank at the statement date.lThe bank returned a customers NSF check for $2

14、25 received as payment of an account receivable.lThe bank statement showed $30 interest earned on the bank balance for the month of July.lCheck 781 for supplies cleared the bank for $268 but was erroneously recorded in our books as $240.lA $486 deposit by Acme Company was erroneously credited to our

15、 account by the bank.第20页/共63页第二十页，共64页。Reconciling the Bank StatementBalance per bank statement, July 319,610$ Additions: Deposit in transit500 Deductions: Bank error486$ Outstanding checks2,417 2,903 Adjusted cash balance7,207$ Balance per depositors records, July 317,430$ Additions: Interest30 De

16、ductions: Recording error28$ NSF check225 253 Adjusted cash balance7,207$ 第21页/共63页第二十一页，共64页。Reconciling the Bank StatementGENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditJul31 Cash30Interest Revenue3031 Supplies Inventory28Accounts Receivable225Cash253第22页/共63页第二十二页，共64页。Used for mi

17、nor expenditures.Petty Cash FundsHas one custodian.Replenished periodically.Petty Cash Funds第23页/共63页第二十三页，共64页。Short-Term InvestmentsBond InvestmentsCapital Stock InvestmentsCurrent AssetsAlmost As Liquid As CashReadily MarketableMarketable Securities are . . .第24页/共63页第二十四页，共64页。A Principle of Ass

18、et ValuationMost short-term investments in marketable securities are classified as available for sale and appear on the balance sheet at their current market value.第25页/共63页第二十五页，共64页。Lets turn our attention to accounts receivable.第26页/共63页第二十六页，共64页。Uncollectible Accounts If a company makes credit

19、sales to customers, some accounts inevitably will turn out to be uncollectible.PAST DUE第27页/共63页第二十七页，共64页。GENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditUncollectible Accounts Expense$Allowance for Doubtful Accounts$Reflecting Uncollectible Accounts in the Financial StatementsAt the

20、 end of each period, record an estimate of the uncollectible accounts.Contra-asset accountSelling expense第28页/共63页第二十八页，共64页。The Allowance for Doubtful AccountsAccounts receivableLess: Allowance for doubtful accountsNet realizable value of accounts receivableThe net realizable value is the amount of

21、 accounts receivable that the business expects to collect.第29页/共63页第二十九页，共64页。Writing Off an Uncollectible Account ReceivableWhen an account is determined to be uncollectible, it no longer qualifies as an asset and should be written off.GENERAL JOURNALDateAccount Titles and ExplanationPR DebitCredit

22、Allowance for Doubtful Accounts$Accounts Receivable (X Customer)$第30页/共63页第三十页，共64页。Writing Off an Uncollectible Account ReceivableAssume that on January 5, K-Max determined that Jason Clark would not pay the $500 he owes.K-Max would make the following entry.GENERAL JOURNALDateAccount Titles and Exp

23、lanationPR DebitCreditJan. 5 Allowance for Doubtful Accounts500Accounts Receivable (J. Clark)500第31页/共63页第三十一页，共64页。Writing Off an Uncollectible Account ReceivableAssume that before this entry, the Accounts Receivable balance was $10,000 and the Allowance for Doubtful Accounts balance was $2,500.Let

24、s see what effect the write-off had on these accounts.第32页/共63页第三十二页，共64页。Writing Off an Uncollectible Account ReceivableBefore Write-Off After Write-OffAccounts receivable10,000$ 9,500$ Less: Allow. for doubtful accts.2,500 2,000 Net realizable value7,500$ 7,500$ Notice that the $500 write-off did

25、not change the net realizable value nor did it affect any income statement accounts.第33页/共63页第三十三页，共64页。Monthly Estimates of Credit Losses At the end of each month, management should estimate the probable amount of uncollectible accounts and adjust the Allowance for Doubtful Accounts to this new est

26、imate.Two Approaches to Estimating Credit Losses:1.Balance Sheet Approach2.Income Statement Approach第34页/共63页第三十四页，共64页。Estimating Credit Losses The Balance Sheet Approach Year-end Accounts Receivable is broken down into age classifications. Each age grouping has a different likelihood of being unco

27、llectible. Compute a separate allowance for each age grouping.第35页/共63页第三十五页，共64页。Estimating Credit Losses The Balance Sheet ApproachAt December 31, 2005, the receivables for EastCo, Inc. were categorized as follows:EastCo, Inc.Schedule of Accounts Receivable by AgeDecember 31, 2005Days Past Due Acc

28、ounts Receivable Balance Estimated Bad Debts Percent Estimated Uncollectible Amount Current45,000$ 1 - 3015,000 31 - 605,000 Over 602,000 67,000$ 第36页/共63页第三十六页，共64页。EastCo, Inc.Schedule of Accounts Receivable by AgeDecember 31, 2005Days Past Due Accounts Receivable Balance Estimated Bad Debts Perce

29、nt Estimated Uncollectible Amount Current45,000$ 1% 1 - 3015,000 3%31 - 605,000 5%Over 602,000 10%67,000$ Estimating Credit Losses The Balance Sheet ApproachAt December 31, 2005, the receivables for EastCo, Inc. were categorized as follows: 第37页/共63页第三十七页，共64页。EastCo, Inc.Schedule of Accounts Receiv

30、able by AgeDecember 31, 2005Days Past Due Accounts Receivable Balance Estimated Bad Debts Percent Estimated Uncollectible Amount Current45,000$ 1%450$ 1 - 3015,000 3%450 31 - 605,000 5%250 Over 602,000 10%200 67,000$ 1,350$ Estimating Credit Losses The Balance Sheet ApproachAt December 31, 2005, the

31、 receivables for EastCo, Inc. were categorized as follows: 第38页/共63页第三十八页，共64页。GENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditDec. 31 Uncollectible Accounts Expense850Allowance for Doubtful Accounts850EastCos unadjusted balance in the allowance account is $500.Per the previous comput

32、ation, the desired balance is $1,350.Estimating Credit Losses The Balance Sheet Approach第39页/共63页第三十九页，共64页。Lets look at another way to estimate credit losses!第40页/共63页第四十页，共64页。Estimating Credit Losses The Income Statement ApproachUncollectible accounts percentage is based on actual uncollectible a

33、ccounts from prior years credit sales.Focus is on determining the amount to record on the income statement as Uncollectible Accounts Expense. 第41页/共63页第四十一页，共64页。Estimating Credit Losses The Income Statement Approach第42页/共63页第四十二页，共64页。Estimating Credit Losses The Income Statement ApproachIn 2005, E

34、astCo had credit sales of $60,000.Historically, 1% of EastCos credit sales has been uncollectible.For 2005, the estimate of uncollectible accounts expense is $600. ($60,000 .01 = $600)Now, prepare the adjusting entry for December 31, 2005.第43页/共63页第四十三页，共64页。Estimating Credit Losses The Income State

35、ment ApproachGENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditDec. 31 Uncollectible Accounts Expense600Allowance for Doubtful Accounts600第44页/共63页第四十四页，共64页。Uncollectible AccountsSummaryAging of ReceivablesEmphasis on Realizable ValueAccts. Rec.All. for Doubtful Accts.Balance Sheet Foc

36、us% of Credit SalesEmphasis on MatchingSalesUncoll. Accts. Exp.Income Statement Focus第45页/共63页第四十五页，共64页。Concentrations of Credit RiskConcentrations of credit risk occur if a significant portion of a companys receivables are due from a few major customers or from customers operating in the same indu

37、stry or geographic region.The FASB requires disclosure of all significant concentrations of credit risk in the notes to the financial statements.第46页/共63页第四十六页，共64页。Recovery of an Account Receivable Previously Written OffGENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditAccounts Receiva

38、ble (X Customer)$Allowance for Doubtful Accounts$Cash$Accounts Receivable (X Customer)$Subsequent collections require that the original write-off entry be reversed before the cash collection is recorded.第47页/共63页第四十七页，共64页。Direct Write-Off MethodThis method makes no attempt to match revenues with th

39、e expense of uncollectible accounts.GENERAL JOURNALDateAccount Titles and ExplanationPR DebitCreditJune 15 Uncollectible Accounts Expense$Accounts Receivable (X Customer)$第48页/共63页第四十八页，共64页。Income Tax Regulations and Financial ReportingDirect write-off method required to calculate taxable income.Ta

40、xable IncomeFinancial Statement IncomeGAAPGAAPGAAPGAAPAllowance methods better match expenses with revenues.第49页/共63页第四十九页，共64页。Internal Controls for ReceivableSeparate the following duties: Maintenance of the accounts receivable subsidiary ledger. Custody of cash receipts. Authorization of accounts

41、 receivable write-offs.第50页/共63页第五十页，共64页。Management of Accounts ReceivableCredit TermsMinimize Accounts ReceivableExtending credit encourages customers to buy from us . . . . . but it ties up resources in accounts receivable. 第51页/共63页第五十一页，共64页。Management of Accounts ReceivableFactoring Accounts R

42、eceivable Credit Card Sales 第52页/共63页第五十二页，共64页。A promissory note is an unconditional promise in writing to pay on demand or at a future date a definite sum of money.Notes Receivable and Interest RevenueMakerthe person who signs the note and thereby promises to pay.Payeethe person to whom payment is

43、 to be made.第53页/共63页第五十三页，共64页。PROMISSORY NOTE Location Date after this date promises to pay to the order of the sum of with interest at the rateof per annum. signedtitleMiami, FlNov. 1, 2005Ninety daysPorter CompanyJohn CaldwellHall Company$10,000.0012.0%CFO, Porter CompanyNotes Receivable and Int

44、erest RevenuePorter Company is replacing an existing Accounts Receivable with this Note Receivable with Hall Company.第54页/共63页第五十四页，共64页。On November 1, 2005, Hall Company would make the following entry.DateDescriptionDebitCreditNov. 1 Notes Receivable10,000 Accounts Receivable (Porter Company)10,000

45、 Notes Receivable and Interest Revenue第55页/共63页第五十五页，共64页。 Interest is a charge made for the use of money. The borrower incurs interest expense. The lender earns interest revenue.Interest rates down!Notes Receivable and Interest RevenueLender第56页/共63页第五十六页，共64页。 The interest formula includes three variables:Interest = Principal Interest Rate TimeWhen computing interest for one year, “Time” equals 1. When the computation period is less than one year, then “Time” is a fraction.Notes Receivable and Interest RevenueFor example, if we needed to compute interest for 3 months, “Time” woul