会计英语第5版教学课件lesson3

LessonThree

CurrentAssetsAims:1.Toexplaintheimportanceofcashandtheaccountingtreatmentofcash.2.Tointroducefourinventoryvaluationmethods.3.Toexplaintwosystemsofinventoryaccounting.4.Todiscussthebaddebtandtheaccountingtreatment.5.Tomakeallowancefordoubtfulaccountreceivable.6.Towriteoffanun-collectibleaccountreceivable.3.1

IntroductiontoAssetsAssetsarefutureeconomicbenefitsobtainedorcontrolledbyanentityasaresultofpasttransactionsorevents.Assetsmaybephysical,suchasland,buildings,inventoryofsupplies,material,orfinishedproducts.Assetsmayalsobeintangible,suchaspatentsandtrademarks.Assetsarenormallydividedintotwomajorcategories:currentassetsandlong-termassets.3.2

CurrentAssetsCurrentassetsareassets:(1)intheformofcash;(2)willnormallyberealizedincash;(3)orconservetheuseofcashduringtheoperatingcycleofafirmorforoneyear,whicheverislonger.3.3

CashCashismoneyintheformofbillsorcoins,whichcanpromptpaymentforgoodsorservicesincurrencyorbycheck.Cashislistedfirstinthebalancesheet,becauseitisthemostliquidofallcurrentassets.3.4

InventoryInventoryreferstovariousassetsthatarestockedforthepurposeofsale,productionorconsumptionduringtheprocessoftheproductionandoperationforabusiness.3.5

PerpetualandPeriodicInventorySystemsPurchasesofmerchandisearedebitedtoInventory.Freight-inisdebitedtoInventory.PurchasereturnsandallowancesandpurchasediscountsarecreditedtoInventory.CostofgoodssoldisdebitedandInventoryiscreditedforeachsale.Subsidiaryrecordsshowquantityandcostofeachtypeofinventoryonhand.Activities:perpetualinventorysystem

YoucanlearnitfromthevideobyscanningtheQRcode.问题：请总结永续盘存制特点。PeriodicSystemPurchasesofmerchandisearedebitedtoPurchases.EndingInventorydeterminedbyphysicalcount.CalculationofCostofGoodsSold:Beginninginventory $100,000Purchases,net +800,000Goodsavailableforsale 900,000Endinginventory -125,000Costofgoodssold $775,000TheentriesunderPerpetualandPeriodicinventorysystemareasfollows：Assignment：ABCcompanyhadthefollowinginventorytransactionsduringtheyear.PleasemakeentriesunderPerpetualandPeriodicinventorysystem.3.6

FourCommonInventoryCostFlowMethodsThefourmethodsare:(1)Specificidentification;(2)First-in,first-out(FIFO);(3)Last-in,fast-out(LIFO);(4)Weighted-average.Includesincostofgoodssoldthecostsofthespecificitemssold.Usedwhenhandlingarelativelysmallnumberofcostly,easilydistinguishableitems.Matchesactualcostsagainstactualrevenue.Costflowmatchesthephysicalflowofthegoods.Mayallowacompanytomanipulatenetincome.SpecificIdentificationAssumesgoodsareusedintheorderinwhichtheyarepurchased.Approximatesthephysicalflowofgoods.Endinginventoryisclosetocurrentcost.Failstomatchcurrentcostsagainstcurrentrevenues.First-In,First-Out(FIFO)Pricesitemsintheinventoryonthebasisoftheaveragecostofallsimilargoodsavailableduringtheperiod.Notassubjecttoincomemanipulation.Measuringaspecificphysicalflowofinventoryisoftenimpossible.Average-CostLast-In,First-Out(LIFO)Thethirdmethod(last-in,first-out)assumesthatthecostofthegoodspurchasedlastischargedtothecostofgoodssold.3.7

ImpactontheIncomeStatementoftheCostFlowMethodThecostflowmethodacompanyusesinitsaccountinghasastraightinfluenceontheincomestatement,costofgoodssold,andthegrossmargin,Sotheincomemustbeinfluenced.3.8

ImpactontheBalanceSheetoftheCostFlowMethodSincethecostofinventoryisallocatedbetweenthecostofgoodssoldandtheendinginventory,thetypeofthecostflowmethodemployedbyacompanyhaseffectsonthebalancesheetaswellastheincomestatement.Impactonthefinancialstatementsofcostflow3.9

AnExampleofthePerpetualInventorySystemAssumethatacompanynamedYouthElectricMotorhadsuchendingbalancesinitsaccounts:Assets=ClaimsCash+Inventory=ContributedCapital+RetainedEarnings$9000+$3000=$9000+$3000Nowconsiderthefollowingtransactionsthathappenedin2020:(1)Twopurchasesofelectricmotorweremade;(2)Onesaleofthegoodstookplace.BeginningInventory200units×$15=$3000(atcost)PurchaseOne240units×$18=$4320(atcost)PurchaseTwo160units×$20=$3200(atcost)Sale540units×$40=$21600(atsellingprice)3.10

FIFOMethodUnderFIFO(first-in,first-out),thelaterisdeterminedbyaddingupthe540electricmotorthatcametothecompanyfirst.Thefirst540unitsbroughttoYouthElectricmotorconsistof:200unitsofthebeginninginventoryatthepriceof$15each,240unitsfromthefirstpurchase—$18each,and100fromthesecondpurchase—$20each.ThecalculationofthegoodssoldunderFIFOisthereforeasfollows:BeginningInventory200units×$15=$3000PurchaseOne240units×$18=$4320PurchaseTwo100units×$20=$2000Total$93203.11

LIFOMethodAsitnamesimplies(last-in,first-out),thecostofgoodssoldiscalculatedusingthecostsoftheelectricmotorthatthecompanypurchasedlast.The60unitsfromthebeginninginventoryremaininInventory.Thecomputationsarebelow:PurchaseTwo160units×$20=$3200PurchaseOne240units×$18=$4320BeginningInventory140units×$15=$2100Total$96203.12

Weighted-averageMethodTheweighted-averagecostperunitis$17.53(i.e.,$10520/600units).Inourillustration,thecosttobemovedfromInventorytotheexpenseaccountis$9466.2(i.e.,$17.53×540units).3.13

TheDifferencesintheFinancialStatementsundertheThreeMethodsIncomeStatementFIFOLIFOWeighted-averageSales$21600$21600$21600CostofGoodsSold(9320)(9620)(9466)GrossMargin122801198012134OperatingExpenses000IncomebeforeTaxes122801198012134IncomeTaxExpense(3684)(3594)(3640)NetIncome$8596$8386$8494BalanceSheetAssets

Cash

Inventory$193961200$19486900$194401054TotalAssets$20596$20386$20494Liabilities$0$0$0Equity

ContributedCapital

RetainedEarnings$900011596$900011386$900011494TotalEquity$20596$20386$20494StatementofCashFlowsOperatingActivities

CashInflowfromSales

CashOutflowforInventory

CashOutflowforTax$21600(7520)(3684)$21600(7520)(3594)$21600(7520)(3640)NetCashFlowfromOperatingActivities$10396$10486$10440InvestingActivities$0$0$0FinancingActivities$0$0$0NetIncreaseinCash$10396$10486$10440BeginningCashBalance$9000$9000$9000EndingCashBalance$19396$19486$194403.14

TheDifferenceintheIncomebeforeTaxesundertheThreeMethodsYouhavepossiblynoticedthattheamountofincomebeforetaxesisthebiggestforFIFO($12280),andthelowestforLIFO($11980).Whyso?Considerthattheendinginventoriesarejustviseversaforthetwomethods(respectively,$1200and$900).So,thecostofgoodssoldforFIFOislower($9320)thanthatforLIFO($9620).Asaresult,wecanseethedifferenceintheincomebeforetaxes.CaseStudy(案例)costflowmethodsABCcompanyusesaperpetualinventorysystem.ThecompanyhadthefollowinginventorycostlayersduringthemonthofJuly.OnJuly15,thecompanysold270computerstoitscustomers.Instructions:1、calculatethecostofthe270computersusingLIFO.2、calculatethecostofthe270computersusingFIFO.3、calculatethecostofthe270computersusingweighted-averageinventorymethods.4、calculatethecostofthe270computersusingSpecificidentificationmethod.(200oftheunitssoldwerepurchasedonJuly.1,andtheremainingunitswerepurchasedonJuly.9).5、Whichofthefourcostflowmethodswillresultinthelowestcostofgoodssoldforthecurrentyear?Canyoumakeanexplanationtoit?6、Ifthepurchasepriceoftheinventoryisexpectedtodecline,whichmethod（FIFOorLIFO）willresultinalowercostofgoodssold?3.15

SalesandPurchasesMixed:anExamplewhatifwehavesalesandpurchasesmixed,likeonepurchaseisfollowedbyasale,thenagainpurchase(s)andsale(s),etc.?Inthissituationnothingisdifferent—alltherulesforusingFIFO,LIFO,weighted-averageremainthesame.ThefollowingexamplewillgiveyouagoodillustrationofapplyingFIFOandLIFOforsalestransactionsthatoccurintermittentlywithpurchases.3.16

TheUseoftheLowerofCostorMarketRuleOncethecostofendinginventoryiscomputed,itisrequiredtocompareitwiththecurrentmarketvalue.Ifthemarketvalueofendinginventoryislowerthanthebookvalueofsuchinventory,theresultantlossmustberecognizedinthecurrentperiod.Thelowerofcostormarketrulecanbeappliedto:(1)eachindividualinventoryitem;(2)majorclassesorcategoriesofinventory;(3)entirecostofinventoryinaggregate.3.17

InventoryLossIfthemarketvalueofanitem(oritemsinaggregate)islowerthanitscost,thecompanyhastoreduceitsendinginventorybytheamountofdifference.3.18

AccountReceivable(or:Debtors)Accountsreceivableareveryliquidassets,usuallybeingconvertedintocashwithinaperiodof30to60days.Mostbusinessessellgoodsoncredittermsi.e.totradedebtors.Itmustberecognized,however,thatthereisariskthatsomedebtorswillfailtopaytheirdebtsi.e.thatthedebtsmaybeuncollectible.3.19

HowtoCreateanAccountsReceivable?Thecustomerpurchasesaproduct,butagreestopayforitlater.Insuchsituations,theamountofmoneythatacompanyexpectstogetinthefuturefromacustomeriscalledanaccountreceivable.3.20

TheAllowanceMethodofAccounting

forBadDebts:anExampleUsuallyacompanycannotknowforsurehowmuchofaccountsreceivablewillbedoubtfulinthefuture.Insuchacase,nevertheless,itisreasonabletomakeanestimate.TheamountofaccountsreceivablethatisexpectedtobeuncollectibleisrecordedinaspecialcontraassetaccountcalledAllowanceforDoubtfulDebts.AccountsReceivableLess:AllowanceforDoubtfulDebts$2400(400)NetRealizableValueofReceivables$20003.21

TheGeneralJournalandT-accountsThetransactionsandtheclosingentryareshowninthegeneraljournalandT-accountsasfollows:DateAccount

TitlesDebitCredit1Accounts

Receivable

Service

Revenue6

0006

0002Cash

Accounts

Receivable3

6003

6003Bad

Debts

Expense

Allowance

for

Doubtful

Debts

400

400ClosingEntryService

Revenue

Bad

Debts

Expense

Retained

Earnings6

000

4005

600Assets=Liabilities+EquityCash0Retained

Earnings(2)3

600(cl.)5

600

Bal.

3

600Bal.

5

600Accounts

ReceivableServices

Revenue(1)6

000(2)3

600

(cl.)6

000(1)6

000

Bal.

2

400Bal.

0Allowance

for

DoubtfulDebtsBad

Debts

Expense(3)400(cl.)400(3)400Bal.

0

Bal.

4003.22

ThreeFinancialStatementsFinancial

Statements

for

2012Income

StatementBalance

SheetStatement

of

Cash

FlowsService

Revenue6

000Assets

Cash

Accounts

Receivable

Less:

Allowance

Net

Realizable

Value3

6002

400(400)2

000Operating

Activities

Cash

Receipts3

600Bad

Debts

Expense(400)Net

Income5

600Investing

Activities0Total

Assets5

600Financing

Activities0Equity

Retained

Earnings5

600Net

Change

in

Cash3

600Plus:

Beg.

Cash

Bal.0Total

Claims5

600Ending

Cash

Balance3

6003.23

HowIstheAmountofAllowance

forDoubtfulDebtsEstimated?Intheillustrationaboveweassumedtheamountofallowancefordoubtfuldebts($200).However,howisitestimatedinreality?Usually,accountantsuserecordsfrompreviousyearsandadjustittocurrentsituations.3.24

DirectWrite-offMethod

Fordirectwrite-offmethod,thereisnoneedforestimates,adjustingentries,oruseoftheAllowanceforDoubtfulDebtsaccountunderthismethod.

UnderthismethodbaddebtsexpenseisrecognizedatthepointwhenanaccountreceivableisknowntobeuncollectibleSuppose,in2019Boycott’sCompanyprovidedservicesonaccountintheamountof$200000.Thetransactionactstoincreaseassetsandequity:In2019Mr.Boycottfoundoutthatoneofhiscustomers,whoowed$1000forservicesprovidedtohimin2018,isnotabletopaytheamountdue.DateAccountTitlesDebitCredit1AccountsReceivable

ServiceRevenue200000

2000002BadDebtsExpense

AccountsReceivable

1000

10003.25

WritingoffanuncollectibleaccountreceivableAssumethat,earlyin2019,the$100accountreceivablefromcustomerAcannotbecollected.Theentrytowriteoffthisuncollectibleaccountreceivableis:

AllowancemethodDirectwrite-offmethod2018201820192019Baddebtexpense2000——1500Accountsreceivable100000—100000—Less:Allowanceforuncollectibleaccounts2000———Netrealizablevalueofaccountsreceivable9800