-中级财务会计Ⅰ PPT课件

1、Cash and Receivables,2-2,.,Accounts Receivable,Result from the credit sales of goods or services to customers.,Are classified as current assets.,Are recorded net of trade discounts.,To give quantity discounts to large customers,Net of trade discounts,a manufacturer might list a machine part at $2,50

2、0 but sell it to a customer a 10% discount. The trade discount of $250 is not recognized directly when recording the transaction. The discount is recognized indirectly by recording the sale at the net of discount price of $2,250, not at the list price.,Trade discount is recognized indirectly, why? H

3、ow to recognize in the company account book?,increase sales,encourage early payment,increase likelihood of collections,Cash discounts,Cash Discounts,2/10,n/30,Cash Discounts,Opportunity cost for Cash discount,If interest rate of loan is 18%, a certain company provides credit policy is 2/10,n/30, thi

4、s credit policy is useful ,or not? Why ? Work in group(10 minutes for discussion),Cash Discounts,Sales are recorded at the invoice amounts.,Sales discounts are recorded as reduction of revenue if payment is received within the discount period.,Gross Method,Sales are recorded at the invoice amount le

5、ss the discount.,Sales discounts forfeited are recordedas interest revenue if payment is received after the discount period.,Net Method,Sales Discounts,Alternative Methods of Accounting for Sales Discounts,Gross Price Method,Net Price Method,Sold $7,000 of merchandise to various customers on Decembe

6、r 4, 2009 with terms of 2/10, n/30,Accounts Receivable 7,000 Sales7,000,Accounts Receivable 6,860 Sales6,860,Sales Discounts,Alternative Methods of Accounting for Sales Discounts,Gross Price Method,Net Price Method,On December 13 received payment on goods at $5,500.,Cash 5,390 Sales Discount110 Acct

7、s. Receivable5,500,Cash5,390 Accts. Receivable5,390,Sales Discounts,Alternative Methods of Accounting for Sales Discounts,Gross Price Method,Net Price Method,Received payment on goods at $1,500 on December 30,Cash 1,500 Accts. Receivable1,500,Cash1,500 Accts. Receivable1,470 Interest revenues 30,Cas

8、h Discounts,On October 5, Hawthorne sold merchandise for $20,000 with terms 2/10, n/30. On October 14, the customer sent a check for $13,720 taking advantage of the discount to settle $14,000 of the amount. On November 4, the customer paid the remaining $6,000.,Exercise,P85 E 2-4,Tracy Company, a ma

9、nufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2011. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Required: 1. Prepare the journal entries to record the sale on November 17 (ignore cost o

10、f goods) and collection on November 26, 2011, gross method 2. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2011, gross method 3. Repeat requirements 1 and 2 , net method.,Answer 2,Requirement 1 Sales price = 100 units x $600 = $6

11、0,000 x 70% = $42,000 November 17, 2011 Accounts receivable42,000 Sales revenue 42,000 November 26, 2011 Cash (98% x $42,000) 41,160 Sales discounts (2% x $42,000) 840 Accounts receivable42,000,Requirement 2 November 17, 2011 Accounts receivable42,000 Sales revenue42,000 December 15, 2011 Cash42,000

12、 Accounts receivable42,000,Requirement 3 Requirement 1, using the net method: November 17, 2011 Accounts receivable41,160 Sales revenue (98% x $42,000) 41,160 November 26, 2011 Cash41,160 Accounts receivable41,160,Requirement 2, using the net method: November 17, 2011 Accounts receivable41,160 Sales

13、 revenue (98% x $42,000)41,160 December 15, 2011 Cash42,000 Accounts receivable41,160 Interest revenue 840,The net method,the net method reflects the reality of the situation-the real price is $41,160 and $840 is an interest for not paying timely. customer should accept cash discount, for the intere

14、st is high, not 2%, but ($2/$98) *365/20= 37.23% effective rate Certainly, the customer could consider the investment profit for these 20 days.,The gross or net method,Which is correct? About income statement - no effect ! Gross Method Net Method Sales $20,000 $19,600 Less: Sales discounts (280) 0 N

15、et sales revenue 19,720 19,600 Interest revenue 0 120 Total revenue $19,720 $19,720,About concepts The difference is the timing of the recognition of any discounts. the gross method is used by most companies, because it doesnt require adjusting entries for discounts not taken.,Subsequent Valuation o

16、f Accounts Receivable 后续计量,three situations could cause the cash collected to be less than the initial valuation of the account receivables: (1) cash discount (2) sale return (3) some account receivables cant be collected,Merchandise may be returned by a customer to a supplier.,A special price reduc

17、tion, called an allowance, may be given as an incentive to keep the merchandise.,Sales Returns,Overstate or understate,Suppose merchandise is sold for $10,000 in December 2011, the merchandise cost $6,000. If all of the merchandise is returned in 2012.,gross profit will be overstated in 2011 and und

18、erstated in 2012 by $4,000. Assets at the end of 2011 also will be overstated by $4,000 because a $10,000 receivable would be recorded instead of $6,000 in inventory.,To avoid misstating the financial statements, sales revenue and accounts receivable should be reduced by the amount of returns in the

19、 period of sale if the amount of returns is anticipated to be material.,estimated returns by debiting a sales returns account (which is a contra account to sales revenue) and crediting an allowance for sales returns account (which is a contra account to accounts receivable),Sales Returns,During the

20、first year of operations, Hawthorne sold $2,000,000 of merchandise that had cost them $1,200,000 (60%). experience indicates 10% return. During the year $130,000 was returned prior to customer payment. Record the returns and the end of the year adjustment.,Actual Returns Sales returns130,000 Account

21、s receivable 130,000 Inventory 78,000 Cost of goods sold (60%) 78,000 Adjusting Entries Sales returns 70,000 Allowance for sales returns 70,000 Inventory-estimated returns 42,000 Cost of goods sold (60%) 42,000 If the estimates are correct in the future: Allowance for sales returns 70,000 Accounts r

22、eceivable 70,000,Keywords 2,Allowance method 备抵法 Direct write-off method 直接冲销法 Bad debts expense 坏账损失 Allowance for uncollectible account 坏账准备 Percentage of credit sales 销售额百分比法 Percentage of accounts receivable 应收账款余额百分比法 Aging of accounts receivable 账龄法 Desired balance 期望的余额,Uncollectible Accounts

23、 Receivable,Bad debts result from credit customers who are unable to pay the amount they owe, regardless of continuing collection efforts.,Bad debts expense is an inherent cost of providing credit. Its an operating expense incurred to make sales. 提供信贷的固有成本,为提高销售额而发生的营业费用.,Uncollectible Accounts Rece

24、ivable,Most businesses record an estimate of the bad debt expense by an adjusting entry at the end of the accounting period.,Bad debt expensexxx Allowance for uncollectible accounts xxx,Allowance for Uncollectible Accounts,Net realizable value is the amount of the accounts receivable that the busine

25、ss expects to collect.,Accounts Receivable Less: Allowance for Uncollectible Accounts Net Realizable Value,1.Relationship to sales (income statement approach): a. Percentage of sales 2.Relationship to accounts receivable (balance sheet approach): a.Percentage of accounts receivable b.Aging of accoun

26、ts receivable,Estimated Bad Debts Method,Income Statement Approach,Focuses on past credit sales to make estimate of bad debt expense. Emphasizes the matching principle by estimating the bad debt expense associated with the current periods credit sales.,Bad debt expense is computed as follows:,In 201

27、2, MusicLand has credit sales of $400,000 and estimates that 0.6% of credit sales are uncollectible. What is Bad Debt Expense for 2012?,Income Statement Approach,MusicLand computes estimated Bad Debt Expense of $2,400.,Bad debt expense2,400 Allowance for uncollectible accounts 2,400,Balance Sheet Ap

28、proach,Focuses on the collectability of accounts receivable to make the estimate of uncollectible accounts. Involves the direct computation of the desired balance in the allowance for uncollectible accounts.,Compute the desired balance in the Allowance for Uncollectible Accounts. Bad Debt Expense is

29、 computed as:,On Dec. 31, 2012, MusicLand has $50,000 in Accounts Receivable and a $200 credit balance in Allowance for Uncollectible Accounts. Past experience suggests that 5% of receivables are uncollectible. What is MusicLands Bad Debt Expense for 2012?,Balance Sheet ApproachComposite Rate,Desire

30、d balance in Allowancefor Uncollectible Accounts,Balance Sheet ApproachComposite Rate,Bad debt expense2,300 Allowance for uncollectible accounts 2,300,Year-end Accounts Receivable is broken down into age classifications.,Each age grouping has a different likelihood of being uncollectible.,Compute de

31、sired balance.,Balance Sheet Approach Aging of Receivables,Use desired balance less the existing balance in theallowance account.,At December 31, 2012, the receivables for EastCo, Inc. were categorized as follows:,Balance Sheet Approach Aging of Receivables,Balance Sheet Approach Aging of Receivable

32、s,EastCos existing balance in the allowance account is $500. the desired balance is $1,350.,Bad debt expense 850 Allowance for uncollectible accounts 850,Uncollectible Accounts,As accounts become uncollectible, write-off this count:,When a customer makes a payment after an account has been written o

33、ff, two journal entries are required.,Allowance for uncollectible accounts 500 Accounts receivable 500,Accounts receivable 500 Allowance for uncollectible accounts 500 Cash500 Accounts receivable 500,Bad debts are simply recorded as they occur (without the use of an allowance account).,Direct Write-

34、off Method,Bad debts expense xxx Accounts receivable xxx,Example 4,The following information relates to a companys accounts receivable (AR): AR balance at the beginning of the year, $300,000; allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales du

35、ring the year, $1,500,000; AR written off during the year, $16,000; cash collections from customers, $1,450,000. Suppose the company estimates bad debts is equal to 2% of credit sales, calculate : (1) bad debt expense for the year (2) the year-end balance in the allowance for uncollectible accounts.

36、 (3) if bad debts will equal 10% of the year-end balance in accounts receivable ?,Answer 1,Bad debt expense = $1,500,000 x 2% = $30,000 (2) Allowance for uncollectible accounts: Beginning balance$25,000 Add: Bad debt expense30,000 Deduct: Write-offs(16,000) Ending balance$39,000,Answer 2,(1)Allowanc

37、e for uncollectible accounts: Beginning balance$ 25,000 Deduct: Write-offs(16,000) desired balance (33,400)* Bad debt expense $24,400 (2)desired balance = $334,000* x 10% = $33,400* Accounts receivable: Beginning balance$ 300,000 Add: Credit sales1,500,000 Deduct: Cash collections(1,450,000) Write-o

38、ffs (16,000) Ending balance$ 334,000*,Exercise,P86 E 2-7 2-9,Keywords 3,Interest-Bearing Notes 带息票据 Noninterest-Bearing Notes 不带息票据 Face amount (face value) 票面价值 Maturity value 到期价值 Financial institutions 金融机构 secured borrowing 质押取得借款 Pledge 质押 mortgage 抵押 Collateral 担保物,Keywords 3,sale of receivabl

39、es 应收债权出售 Factoring 应收账款销售 Securitization 证券化 Discounting 贴现 Recourse 追索权 with recourse 附追索权 without recourse 不附追索权 Assigning (法律)把财产、利息等从一人转入另一人 Transferor 让与人，出让人 Transferee 受让人,Financing With Receivables应收债权融资和出售,Companies may use their receivables to obtain immediate cash through financial insti

40、tutions .,Sale of Receivables,Secured Borrowing,Reasons: shortens cash in operating cycles; avoid the difficulties of collecting receivables. Ways:,Secured Borrowing,The company pledge receivables to borrow money. the financial institution lent the amount of money is less than the amount of receivab

41、les. The difference provides some protection for possible uncollectible accounts. Also, the financial institution charges the borrower finance charge in addition to interest on the loan.,Secured Borrowing,On December 1, 2011, the Santa Teresa Glass Company 从银行借款 $500,000 ,年利率为12% ,按月支付. The company

42、以$620,000 的应收账款作为贷款担保,银行按抵押账款的1.5% 收取费用. Teresa Glass records the borrowing as follows: Cash 490,700 Finance charge expense* (1.5% $620,000) 9,300 Liability-financing arrangement . 500,00 期间,公司的收账、现金折扣、销售退回、坏账冲销等业务照常记录。公司也将向银行还款。12月，该公司收回$400,000的应收账款。 Santa Teresa Glass records the following entrie

43、s: Cash 400,000 Accounts receivable 400,000 interest expense ($500,000 *12%*1/12) 5,000 liability-financing arrangement 400,000 Cash 405,000,Sale of Receivables,Treat as a sale if all of these conditions are met: receivables are removed from transferor. transferee has right to deal with receivables.

44、 transferor does not have control over the receivables. If the transaction fails to meet the three conditions necessary to be classified as a sale, it will be treated as a secured borrowing.,Sale of Receivables,Two popular arrangements used for the sale of receivables are factoring and securitizatio

45、n .,Factoring Arrangements,Factor (银行等金融机构),Supplier (Transferor),Retailer,A factor is a financial institution that buys receivablesfor cash, handles the billing and collection of thereceivables and charges a fee for the service.,Factoring,the factor only gave the transferor between 65%-90% of the r

46、eceivables. The remained balance is retained as security until all of the receivables are collected, then gave the transferor the net of the financing fee. The fee charged by this factor ranges from 3%-6%.,Securitization,the company creates a special purpose entity (SPE), usually a trust or a subsid

47、iary. The SPE buys a pool of trade receivables, credit card receivables, or loans from the company, and then sells related securities, such as bonds or commercial paper, that are collateralized by the receivables.,Sale of Receivables,Without recourse An ordinary sale of receivables to the factor. al

48、l risk of uncollectibility passes to the factor. Control of receivable passes to the factor.,With recourse Transferor (seller) retains risk of uncollectibility. the seller guarantees that the buyer will be paid even if some receivables prove to be uncollectible.,Sale of Receivables,In December 2011,

49、 the Company 将价值$600,000的应收账款出售给 Factor Bank,此为不附追索权的应收债权出售. Factor bank 支付了账面价值的90% (90%$600,000= $540,000), 保留的 10% 包含4% 的费用和垫支在收款中可能发生的sales returns and allowances. 当Factor Bank 收回货款后, 再支付剩余的部分, 估计这10%的债权的公允价值为$50,000.,如果是附追索权的应收债权出售, 追偿金额为$5,000.,If the factor collects all of the receivables, el

50、iminates the recourse liability and increases income,U.S. GAAP vs. IFRS,U.S. GAAP focuses on whether control of assets has shifted from the transferor to the transferee.,The U.S. GAAP and the IFRS approaches often lead to similar accounting treatment for transfers of receivables.,IFRS requires a mor

51、e complex decision process. The company has to have transferred the rights to receive the cash flows from the receivable, and then considers whether the company has transferred “substantially all of the risks and rewards of ownership,” as well as whether the company has transferred control.,Example,

52、H.L Cor. plans to transfer $300,000 of accounts receivable to M.Cor. in exchange for cash. H.L retain all the risks and rewards of ownership but shift control over the receivables to M. Assuming all other criteria are met for recognizing a sale, how would H.L account for this transaction under IFRS

53、or U.S. GAAP?,Under IFRS, treat as a secured borrowing, because they retain all of the risks and rewards of ownership. Under U.S. GAAP, treat as a sale, because they have transferred control.,Notes Receivable,A written promise to pay a specificamount at a specific future date.,Interest-Bearing Notes

54、,November 1, 2012 Notes receivable 25,000 Cash 25,000 December 31, 2012 Interest receivable 500 Interest revenue 500 May 1, 2013 Cash 26,500 Note receivable 25,000 Interest receivable 500 Interest revenue 1,000,On November 1, 2012, West, Inc. loans $25,000 to Winn Co. The note bears interest at 12%

55、and is due on May 1, 2013. Prepare the journal entry on November 1, 2012, December 31, 2012, (year-end) and May 1, 2013 for West.,Interest-Bearing Notes,In China Year-end, face value of the note should plus the interest of the note.,Noninterest-Bearing Notes,Actually do bear interest. Interest is deducted from the face value of the note.,Noninterest-Bearing Notes,On Jan. 1, 2012, West, Inc. accepted a $25,000 noninterest-bearing note from Winn, Co as payment for a sale. The note is discounted at 12% and is due on Dec. 31, 201