《Introduction to Accounting》课件-章节unit 7第7章

Unit7Assets—CurrentAssetsⅡⅠ.ReceivablesⅡ.PrepaymentⅢ.Inventory2025/3/142Currentassetsareassetsthatareexpectedtobeconvertedtocash,soldorconsumedwithin12monthsorwithinthebusiness’snormaloperatingcycleiflongerthanayear.2025/3/143Ⅰ.ReceivablesAccountsReceivableNotesReceivableOtherReceivablesReceivables

Themoneyowingfromsalesoncreditorotherindividualsarereceivables,whichrefertothemonetaryclaimsagainstbusinesses,individualsandotherdebtors.2025/3/1441.AccountsReceivableAccountsreceivablearethereceivablescollectedbyabusinessinsellingproducts,goodsorservices.2025/3/145(1)AccountingofAccountsReceivableDr.AccountsReceivableCr.SalesRevenue

WhenabusinessmakesitssalesonaccountDr.CashCr.AccountsReceivableWhentheamountonaccountiscollected2025/3/146CommercialDiscountDiscountCertainsumofmoneythatisallowedtobedeductedfromcommodityprices.DiscountCashDiscountAdeductionfromthegrossinvoicevaluethatcanbetakenonlyiftheinvoiceispaidwithinaspecifiedperiodoftimetoencourageearlypayment.2025/3/147CommercialDiscountItisusuallyexpressedasapercentage,suchas5%,10%,etc.Itdoesnotaffecttheentryvalueofaccountsreceivablebutisonlyconsideredtheadjustmentofprices.2025/3/148CashDiscountItnormallyappearsas“2/10,1/20,n/30”ontheinvoice.2/10meansadiscountof2%ofthegrossinvoicepriceisdeductibleforpaymentswithin10days;1/20means1%deductibleforpaymentswithin20days;n/30meansthatnodiscountifthepaymentisafter30daysfollowingtheinvoicingdate.2025/3/149CashDiscountDr.AccountsReceivableCr.SalesRevenueWhentransactionoccurredDr.CashSalesDiscountCr.AccountsReceivableWhenthepaymentisreceivedandthecashdiscountisrealized2025/3/1410Example----CashDiscountOnJune1,K15soldmerchandiseof$50,000toSpeed5oncredit.Thecredittermwas2/10,1/20,n/30,andSpeed5paidthemoneyonJune18.June1

Dr.AccountsReceivable-Speed550,000

Cr.SalesRevenue50,000June18

Dr.Cash49,500

SalesDiscount500

Cr.AccountsReceivable-Speed550,0002025/3/1411(2)AccountingofUncollectibleReceivables

-BadDebtsDefinitionAllreceivablesshallbeclearedandcollectedontimeandshallbecheckedwithrelatedpartiesperiodically.Regardlessofthecautionusedingrantingcreditandthecollectionproceduresused,apartofthecreditsalesmaystillbecomeuncollectible.Thisiscalledbaddebts.AccountUsedProvisionforBadDebts坏账准备Itisadeductionitemofaccountsreceivableinthefinancialstatement.2025/3/1412Anyaccountsreceivable,provedtobedefinitelyuncollectible,shallberecognizedasbaddebtsandwrittenoffagainstprovisionforbaddebtsorchargedtocurrentprofitorloss.Anysubsequentrecoveriesforbaddebtswrittenoffshallbecreditedtotheprovisionofbaddebts.Howtorecordbaddebts?2025/3/1413BadDebts1.DirectWrite-offMethod2.AllowanceMethod2025/3/1414

2025/3/14152025/3/14161)DirectWrite-offMethodBadDebtExpenseaccountisestablishedtorecordtheuncollectiblereceivables.IdentifiedbaddebtsarecrediteddirectlytoBadDebtExpensewhenitoccurs.Example:K15soldmerchandiseof$10,000toSpeed5oncreditonApril1.ItwaslaterrecognizeduncollectibleonDec.20.2025/3/1417Dr.AccountsReceivable-Speed510,000Cr.SalesRevenue10,000April1,WhentransactionoccurredDr.BadDebtsExpense10,000Cr.AccountsReceivable-Speed510,000Dec.20,whenthebaddebtisrecognized2025/3/1418WhenbaddebtwrittenoffisrecoveredagainDr.Cash10,000Cr.AccountsReceivable-Speed510,000Dr.AccountsReceivable-Speed510,000Cr.BadDebtsExpense10,0002025/3/1419Thismethodisbasedonfactsinsteadofonestimates,itgoescontrarytothematchingprincipleandtheaccrualbasisintheoryinthatbaddebtswritten-offareoftennotinthesameaccountingperiodasthesales,andisgenerallynotacceptableforfinancialreportingpurposes.2025/3/14202)AllowanceMethodTheallowancefordoubtfulaccountsestimatestheamountofbaddebtsonaregularbasis.AllowanceestimatesPercentageofSalesMethodPercentageofReceivablesMethodAginganalysismethod2025/3/1421WRITINGOFFUNCOLLECTIBLEACCOUNTS:

2025/3/1422①PercentageofSalesMethodItestimatesthebaddebtsfromthenetcreditsalesinagivenperiod,whichfocusattentionontherelationshipofbaddebtslossestonetcreditsales.Normally,thecompanysetupprovisionforbaddebtswithapercentageofbaddebtsestimatedaccordingtoprioryears’condition.Ifthepercentagerateisstillvalid,nochangeisneeded.Ifanabruptchangetakesplace,thepercentagerateshouldbeadjustedtomeetthenewcondition.2025/3/14232025/3/1424ExampleAshlandIncorporatedsold$600,000ofmerchandiseoncreditintheyearof2006andthebaddebtsprovisionpercentagewas2%.Intheyearof2007,$2,000isidentifiedasuncollectible.2025/3/1425Dr.BadDebtExpense12,000Cr.ProvisionforBadDebts12,000WhenbaddebtwasestimatedWhenaccountsreceivableisidentifiedtobeuncollectibleDr.ProvisionforBadDebts2,000Cr.AccountsReceivable2,0002025/3/1426Dr.AccountsReceivable2,000Cr.ProvisionforBadDebts2,000Dr.Cash2,000Cr.AccountsReceivable2,000Whenbaddebtwrittenoffisrecoveredagain2025/3/1427②PercentageofReceivablesMethodItestimatesthebaddebtsbasedontheendingbalanceofaccountsreceivable.Itusesanoverallrate,normally3‰to5‰.2025/3/1428ExampleAshlandIncorporatedhadaccountsreceivableamountingto$4,000,000attheendofyear2005.Itsuncollectibilityis3‰.$20,000wasuncollectiblewhichincluded$10,000ofCompanyBand$10,000ofCompanyC.Theendingbalancein2006ofaccountsreceivablewas4,200,000.$10,000ofCompanyCwascollectedagainin2007,andtheendingbalanceofaccountsreceivableof2007was$4,300,000.2025/3/1429EndingbalanceBaddebt(-)Provisionforcurrentperiod(+)Provisionforbaddebtattheendoftheperiod20054,000,00012,00020064,200,00020,000+20,60012,60020074,300,000-10,000-9,70012,9002025/3/1430AnswerDr.BadDebtExpense12,000Cr.ProvisionforBadDebts12,000EndingbalanceBaddebt(-)Provisionforcurrentperiod(+)Provisionforbaddebtattheendoftheperiod20054,000,00012,0002025/3/1431EndingbalanceBaddebt(-)Provisionforcurrentperiod(+)Provisionforbaddebtattheendoftheperiod20064,200,00020,000+20,60012,600Dr.ProvisionforBadDebts20,000Cr.AccountsReceivable-B10,000-C10,000Dr.BadDebtExpense20,600Cr.ProvisionforBadDebts20,6002025/3/1432

EndingbalanceBaddebt(-)Provisionforcurrentperiod(+)Provisionforbaddebtattheendoftheperiod20074,300,000-10,000-9,70012,900Dr.ProvisionforBadDebts9,700Cr.BadDebtExpense9,700Dr.AccountsReceivable10,000Cr.ProvisionforBadDebts10,000Dr.Cash10,000Cr.AccountsReceivable10,0002025/3/1433③AgingAnalysisSomecompaniesemploymoresophisticatedagingofaccountsreceivableanalysis.

Theywillstratifythereceivablesaccordingtohowlongtheyhavebeenoutstanding(i.e.,performanaging),andapplyalternativepercentagestothedifferentstrata.

Obviously,theoldertheaccount,themorelikelyitistorepresentabadaccount.

It'sagingmayhaveappearedasfollows:2025/3/14342025/3/1435光明乳业6005972025/3/14362025/3/14372.NotesReceivableNotesreceivablerefertothecreditresultingfromthesalesofmerchandises,goodsandserviceintheformofpromissorynotes.Apromissorynoteisanunconditionalwrittendocumentbyamakerwhopromisestopayadefinitesunofmoneytothepayeeonaspecificdate.Anotereceivableshouldberecordedinaccordancewithitsfacevaluewhenitisreceived.2025/3/1438SampleofPROMISSORYNOTEBorrowerInformation:Name:Date:StreetAddress:DateofBirth:City:Areacode/Telephonenumber:State:Driver’sLicenseNumber:Zip:SocialSecurityNumber:LenderInformation:Name:Areacode/Telephonenumber:StreetAddress:Ifpayingbycheck,makecheckpayableto:

Sendpaymentsto:City:State:Zip:LoanInformation:LoanAmount:LoanPeriod:InterestRate:PaymentSchedule:2025/3/14391.PromisetoPay.Forvaluereceived,__________(Borrower)promisestopay___________(Lender)$_______andinterestattheyearlyrateof_____%ontheunpaidbalanceasspecifiedbelow.

2.Installments.3.ApplicationofPayments.Paymentswillbeappliedfirsttointerestandthentoprincipal.4.Prepayment.Borrowermayprepayalloranypartoftheprincipalwithoutpenalty.5.LoanAcceleration.6.Security

2025/3/1440Themakerofthenoteisthepartypromisingtomakepayment.Thepayeeisthepartytowhompaymentwillbemade.2025/3/1441AmountofnotesreceivableNotesReceivableFacevalueofreceivableonmaturityordiscounted

Bal.notesreceivableheldattheendoftheperiodDiscountingmeansthatthebankdeductstheinterestfromthematurityvalueofthenotesandgivestheselleronlythenetproceeds.

2025/3/1442CalculatingInterestonNotesNotesReceivableInterest-bearingNon-interest-bearingInterest=FacevalueofNote×AnnualInterestRate×TimeinTermsofOneYear2025/3/1443TermsofNoteInterestComputationMaturityValue$730,18%,120days$1,000,15%,6months$2,000,12%,1year

Face×Rate×Time730×18%×120/3601,000×15%×6/122,000×12%×1773.801,0752,2402025/3/1444AccountingforNotesReceivable1)Recevinganotefromthecustomerpayinghisaccountspayable2)Collectingthepaymentatmaturity3)NotreceivethepaymentatmaturityDr.NotesReceivableCr.AccountsReceivableDr.CashCr.NotesReceivableInterestRevenueDr.AccountsReceivableCr.NotesReceivableInterestRevenue2025/3/1445Ⅱ.PrepaymentPrepaymentreferstothemoneypaidtootherbusinessformerchandiseorservicesnotreceivedyet.AmountprepaidtothesuppliersPrepaymentTransferredamountwhengoodsreceivedorexpenseincurred

Bal.amountprepaidbutnotsettled2025/3/1446Dr.PrepaymentCr.CashWhenmoneyareprepaidAttheendoftheaccountingperiodDr.Expense/AssetsCr.Prepayment2025/3/1447Ⅲ.InventoryInventoriesrefertomerchandises,finishedgoods,work-in-process,andallkindsofmaterials,fuels,containers,low-valueandperishablearticlesthatarestockedforhepurposeofsale,productionandconsumption.2025/3/1448PerpetualInventorySystem

StockingSystemsThebusinesskeepsacontinuousrecordofinventory.Thebalanceofinventoryshouldgivethecostofinventoryonhandananytime.StockingSystems

PeriodicInventorySystem

Thebusinessdoesnotkeepacontinuousrecordoftheinventoryonhand.Attheendofperiod,aphysicalcountismade,andcostofendinginventoryisdetermined.√2025/3/1449Thecontrolandmanagementofinventoriesareveryimportant:①Withtheoperatingprocessofbusiness,inventoriesarepurchased,consumedandsoldcontinuously,andtheiramountisinconstantchange.②Inventoriesarerelativelyslowtotransfertocash,soithasabiginfluenceonthefinancialpositionofacompany.2025/3/1450InventorycostingsystemNormally,inventoriesareaccountedforathistoricalcost.Historicalcostofinventoriesincludesthetransportation,allthehandlingfees,insurance,etc.Allinventoriesshallbetakenstockofregularly.Anyoverage,shortageandout-of-date,deteriorationanddamagethatneedtobescrappedshallbedisposedofwithintheyearandaccountedintocurrentprofitorloss.2025/3/1451FIFO

CostingSystemsCostingSystems

LIFO

WeightedAverageCostDateExplanationUnitsUnitcostTotalcostBalanceinunitsJan1Beginninginventory100$101,000100Mar12Purchases200$112,200300Apr16Purchases300$123,600600Aug10Sales550????50Nov21Purchases400$135,2004502025/3/14521.First-inFirst-o