Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,.

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,."

Transcription

1 Unit 6 Receivables 7-1 Receivables - Claims resulting from credit sales to customers and others goods or services for money,. Oral promises of the purchaser to pay for goods and services sold (credit sale; trade). Accounts Receivable Written promises to pay a sum of money on a specified future date (trade or nontrade). Notes Receivable

2 Accounts Receivable Transactions for Nontrade Receivables (Other Receivables) Advances to officers, directors, and employees. 2. Advances to subsidiaries. 3. Deposits paid to cover potential damages or losses. 4. Deposits paid as a guarantee of performance or payment. 5. Dividends, interest receivable, rent, or royalties accrued. 6. Claims against: Insurance companies for casualties sustained; amounts arising from litigation; governmental bodies for tax refunds; common carriers for damaged or lost goods; creditors for returned, damaged, or lost goods; customers for returnable items (crates, containers, etc.). 7. Claims for subscriptions for the entity s securities.

3 7-3 Receivables Trade & Nontrade Receivables (report as separate items)

4 7-4 Recognition of Accounts Receivables Trade Discounts Reductions from the list price Not recognized in the accounting records Customers are billed net of discounts e.g., 10 % Discount for new Retail Store Customers

5 7-5 Cash Discounts 2/10,n/30 Discount percent Number of days discount is available Otherwise, net (or all) is due Credit period

6 7-6 Cash Discounts Gross Method Net Method Sales are recorded at the invoice amounts. Sales discounts taken: reduction of revenue. Sales are recorded at the invoice amount less the cash discount. Sales discounts forfeited: interest revenue.

7 Cash 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, October 5, 2013 October 5, 2013 October 14, 2013 October 14, 2013 November 4, 2013 November 4, 2013

8 Sales Returns Merchandise may be returned by a customer to a supplier. A special price reduction, called an allowance, may be given as an incentive to keep the merchandise. To avoid misstating the financial statements, sales revenue and accounts receivable should be reduced by the amount of returns in the period of sale if the amount of returns is anticipated to be material. 7-8

9 Sales Returns 7-9 During the first year of operations, Hawthorne sold $2,000,000 of merchandise that had cost them $1,200,000 (60%). Industry experience indicates a10% return rate. During the year $130,000 was returned prior to customer payment. Record the returns and the end of the year adjustment. Actual Returns Sales returns 130,000 Accounts receivable 130,000 Inventory 78,000 Cost of goods sold (60%) 78,000 Adjusting Entries (estimated remaining) Sales returns 70,000 Allowance for sales returns 70,000 Inventory estimated returns 42,000 Cost of goods sold (60%) 42, , ,000 = 200,000 (10% of 2,000,000)

10 7-10 Uncollectible Accounts Receivable Bad debts result from credit customers who are unable to pay the amount they owe, regardless of continuing collection efforts. In conformity with the matching principle, bad debt expense should be recorded in the same accounting period in which the sales related to the uncollectible account were recorded.

11 7-11 Uncollectible Accounts Receivable Most businesses record an estimate of the bad debt expense by an adjusting entry at the end of the accounting period. Normally classified as a selling expense and closed at year-end. Contra asset account to accounts receivable. Bad debt expense Allowance for uncollectible accounts xxx xxx

12 7-12 Allowance for Uncollectible Accounts Accounts Receivable Less: Allowance for Uncollectible Accounts Net Realizable Value Net realizable value is the amount of the accounts receivable that the business expects to collect. Income Statement Approach Balance Sheet Approach Composite Rate Aging of Receivables

13 Income Statement Approach 7-13 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 period s credit sales. Bad debt expense is computed as follows: Current Period Credit Sales Estimated Bad Debt % = Estimated Bad Debt Expense

14 Income Statement Approach 7-14 In 2014, MusicLand has credit sales of $400,000 and estimates that 0.6% of credit sales are uncollectible. What is Bad Debt Expense for 2014? MusicLand computes estimated Bad Debt Expense of $2,400. $ 400, % = $ 2,400 Bad debt expense 2,400 Allowance for uncollectible accounts 2,400

15 Balance Sheet Approach 7-15 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 computed as: Desired Balance in Allowance for Uncollectible Accounts Existing Year-End Balance in Allowance for - Uncollectible Accounts = Estimated Bad Debt Expense

16 Balance Sheet Approach Composite Rate 7-16 On Dec. 31, 2014, 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 MusicLand s bad debt expense for 2014?

17 Balance Sheet Approach Composite Rate 7-17 Determine the desired balance in allowance for uncollectible accounts $ 50, % = $ 2,500 Allowance for Uncollectible Accounts 200 2,300 2,500 Bad debt expense 2,300 Allowance for uncollectible accounts 2,300

18 Balance Sheet Approach Aging of Receivables 7-18 Year-end accounts receivable is broken down into age classifications. Each age grouping has a different likelihood of being uncollectible. Compute required uncollectible amount. Compare required uncollectible amount with the existing balance in the allowance account.

19 Balance Sheet Approach Aging of Receivables 7-19 At December 31, 2014, the receivables for EastCo, Inc., were categorized as follows: Days Past Due EastCo, Inc. Schedule of Accounts Receivable by Age December 31, 2014 Accounts Estimated Receivable Percent Balance Uncollectible Estimated Allowance Current $ 45,000 1% $ ,000 3% ,000 5% 250 Over 60 2,000 10% 200 $ 67,000 $ 1,350

20 Balance Sheet Approach Aging of Receivables 7-20 EastCo s unadjusted balance in the allowance account is $500. Per the previous computation, the required balance is $1,350. Allowance for Uncollectible Accounts ,350 Bad debt expense 850 Allowance for uncollectible accounts 850

21 When Uncollectible Accounts Incur: 7-21 As accounts are deemed to be uncollectible, a journal entry is made to record the actual write-off. Allowance for uncollectible accounts 500 Accounts receivable 500 If a customer makes a payment after an account has been written off, two journal entries are required. Accounts receivable 500 Allowance for uncollectible accounts 500 Cash 500 Accounts receivable 500

22 7-22 Direct Write-off Method If uncollectible accounts are immaterial, bad debts are simply recorded as they occur (without the use of an allowance account; not permitted by GAAP). Bad debts expense Accounts receivable xxx xxx

23 Summary of Measurement and Reporting Issues for Accounts Receivable Recognition Depends on the earnings process; for most credit sales, revenue and the related receivables are recognized at the point of delivery. Initial valuation Initially recorded at the exchange price agreed upon by the buyer and seller. Subsequent valuation Initial valuation reduced to net realizable value by: 1. Allowance for sales returns 2. Allowance for uncollectible accounts: The income statement approach The balance sheet approach Classification Almost always classified as a current asset. 7-23

24 Accounts Receivable Presentation Illustrated 7-24 Current Assets: Cash $ 346 Accounts receivable, net of $25 allowance 475 Inventory 812 Prepaids 40 Total current assets 1,673 Fixed Assets: Assets Office equipment 5,679 Furniture & fixtures 6,600 Less: Accumulated depreciation (3,735) Total fixed assets 8,544 Total Assets $ 10,217

25 7-25 Recognition of Notes Receivable Notes Receivable Supported by a formal promissory note. A negotiable instrument. Maker signs in favor of a Payee. Interest-bearing (has a stated rate of interest) OR Zero-interest-bearing (interest included in face amount).

26 7-26 Notes Receivable Reasons for Accepting a Note: to extend payment period of an outstanding receivable (from an overdue customer). to sell products or services to High-risk or new customers. to make a loan to employees and subsidiaries. to sell property, plant, and equipment. to lend money to borrowers (the majority of notes).

27 7-27 Notes Receivable A written promise to pay a specific amount at a specific future date. Face amount of the note Annual interest rate Fraction of the annual period = Interest Even for maturities less than 1 year, the rate is annualized.

28 Recognizing Notes Receivable Short-Term Record at Face Value, less allowance (similar to Accounts Receivable) Long-Term Record at Present Value of expected cash flows (loss is treated the same with shortterm receivables Interest Rates Stated rate = Market rate Stated rate > Market rate Stated rate < Market rate Note Issued at Face Value Premium Discount

29 Interest-Bearing Notes 7-29 On November 1, 2014, West, Inc., loans $25,000 to Winn Co. The note bears interest at 12% and is due on November 1, Prepare the journal entry on November 1, 2014, December 31, 2014, (year-end) and November 1, 2015, for West. November 1, 2014 Notes receivable 25,000 Cash 25,000 December 31, 2014 Interest receivable 500 Interest revenue 500 November 1, 2015 Cash 28,000 Note receivable 25,000 Interest receivable 500 Interest revenue 2,500

30 Present Value Table $1,000 x = $3,170 Interest Received Factor Present Value PV of An Annuity Due At 10% = $10,000 x = $6,830 Principal Factor Present Value.90909x1.1=

31 Note Not Issued at Face Value Interest-Bearing Note - Example Illustration: January 1, 2012, Good Neighbor Corp. makes a loan to Needy Co. and receives in exchange a four-year, $10,000 note at stated interest of 10 percent annually. The market rate of interest for a note of similar risk is 12 percent. How does Good Neighbor record the receipt of the note? N (period) = 4 i = 12% $10,000 Principal $1,000 1,000 1,000 1,000 Interest

32 Note Not Issued at Face Value Interest-Bearing Notes - Example (continued) $1,000 x = $3,037 Interest Received Factor Present Value $10,000 x = $6,355 Principal Factor Present Value 9,392 = 3, ,355 PV or Note Carrying Amount

33 Note Not Issued at Face Value Interest-Bearing Note - Example (continued) Amortization Schedule of Note Discount Effective-Interest Method 10% Note and Discounted at 12% Cash Received (10%) Interest Revenue (12%) Discount Amortized Note Carrying Amount 1/1/12 9,392 1/1/13 1,000 a 1,127 b 127 9,519 1/1/14 1,000 1, ,661 1/1/15 1,000 1, ,820 1/1/16 1,000 1, ,000 4,000 4, a $1,000 = $10,000 x 10% b $9,392 x 12% = $1,127 c $9,392 + $127 = $9,519 c

34 7-34 Note Not Issued at Face Value Interest-Bearing Note - Example (cont d) Illustration: Calculation Presentation 1/1/12 Face value of the note $10,000 Present value of the principal: $10,000 (PVF 4, 12%) = $10,000 x $6,355 Present value of the interest: $10,000 (PVF - OA 4, 12%) = $10,000 x $3,037 Present value of the note 9,392 Discount (Difference) $608

35 Note Not Issued at Face Value Interest-Bearing Note (continued) - Example Journal Entries for Interest-Bearing note Date Account Title Debit Credit 1/1/2012 Notes Receivable 10,000 Discount on Notes Receivable 608 Cash 9,392 12/31/2012 Cash 1,000 Discount on Notes Receivable 127 Interest Revenue 1,127 (9,392 x 12% = 1,127) Present value of the note: $9,392

36 Noninterest-Bearing Notes (Zero Interest) 7-36 Actually do bear interest. Interest is deducted (discounted) from the face value of the note Cash proceeds = face value of note - discount, because interest is included in face amount.

37 Present Value Table $1,000 x = $3,170 Interest Received Factor Present Value $10,000 x = $6,830 Principal Factor Present Value (See slide 30)

38 Note Not Issued at Face Value Zero Interest-Bearing Note - Example Illustration: January 1, 2012, Big Help Company made a loan and receives a four-year, $10,000 zero-interest-bearing note. The market rate of interest (implicit interest rate or discount rate) for a note of similar risk is 10 percent. How does Big Help record the receipt of the note? N (period) = 4 i = 10% $10,000 Principal $1,000 1,000 1,000 1,000 Interest

39 Note Not Issued at Face Value Zero Interest-Bearing Note - Example (cont d) Amortization Schedule of Note Discount Effective-Interest Method 0% Note and Discounted at 10% Cash Received Interest Revenue Discount Amortized Note Carrying Amount 1/1/12 6,830 1/1/ ,513 1/1/ ,264 1/1/ ,093 1/1/ , ,170 3,170 6,830 = 10,000 x (see slide 30) 683 = 6,830 x 10% 910 = 9,093 x 10% + 1 adjustment

40 Note Not Issued at Face Value Zero Interest-Bearing Note - Example (continued) Journal Entries for Zero-Interest-Bearing note Principal (Present value): $6,830 Interest: deducted (discounted) from the face amount to determine the cash proceeds made available to the borrower. Date Account Title Debit Credit 1/1/2012 Notes Receivable 10,000 Discount on Notes Receivable 3,170 Cash 6,830 12/31/2012 Discount on Notes Receivable 683 Interest Revenue 683 (6,830 x 10%)

41 Noninterest-Bearing Notes Example 2 On Jan. 1, 2014, West, Inc., accepted a $25,000 noninterestbearing note from Winn Co. as payment for a sale. The note is discounted at 12% (Market Rate) and is due on Dec. 31, Prepare the journal entries on Jan. 1, 2014, and Dec. 31, January 1, 2014 Notes receivable 25,000 Discount on notes receivable 3,000 Sales revenue 22,000 ($25,000 * 12% = $3,000) December 31, 2014 Cash 25,000 Discount on notes receivable 3,000 Interest revenue 3,000 Note receivable 25,000

42 Reporting Notes Receivable Example for Illustration (Cost basis): 9/30/12 Notes Receivable (Loans) 800,000 Allowance for Note (Loan) Losses 100,000 Net Notes Receivable (carrying amount) 700,000

43 Valuation of Notes Receivable (continued) 7-43 Illustration (using fair value option): At December 31, 2012, Gracious Lady Company has notes receivable that have a fair value of $500,000 and a carrying amount of $700,000, Gracious Lady decides to use the fair value option for these receivables. This is the first valuation (the original year the instrument is recognized) of these recently acquired receivables. At December 31, 2012, Gracious Lady makes an adjusting entry to record the decrease in value of Notes Receivable and to record the unrealized holding loss, as follows: Unrealized Holding Gain or Loss (UHGL) - Income 200,000 Notes Receivable (or Fair Value Adjustment) 200,000 (If not electing FV option & your holding is less than 20%, and if it is a trading security, UHGL is reported in Income Statement; if it is available for sale security, UHGL is reported as Other Comprehensive Income.

44 Comprehensive Income 7-44 Important Notes: If companies choose the fair value option, the receivables are recorded at fair value, with unrealized holding gains or losses reported as part of net income instead of Comprehensive Income or Losses. Reporting requirements for Other Comprehensive Income: FASB ASC This Subtopic requires an entity to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements A An entity reporting comprehensive income in a single continuous financial statement shall present its components in two sections, net income and other comprehensive income. If applicable, an entity shall present the following in that financial statement: a. A total amount for net income together with the components that make up net income. b. A total amount for other comprehensive income together with the components that make up other comprehensive income. As indicated in paragraph , an entity that has no items of other comprehensive income in any period presented is not required to report comprehensive income. 45-1B c. Total comprehensive income. An entity reporting comprehensive income in two separate but consecutive statements shall present the following: a. Components of and the total for net income in the statement of net income b. Components of and the total for other comprehensive income as well as a total for comprehensive income in the statement of other comprehensive income, which shall be presented immediately after the statement of net income. A reporting entity may begin the second statement with net income.

45 7-45 Valuating Notes Receivable Short-Term reported at Net Realizable Value (same as accounting for accounts receivable). Long-Term - FASB requires companies disclose not only their cost but also their fair value in the notes to the financial statements. Fair Value Option. Recently, the FASB has given companies the option to use fair value as the basis of measurement for financial instruments including receivables, in the financial statements.

46 7-46 U.S. GAAP vs. IFRS In general, IFRS and U.S. GAAP are very similar with respect to accounts receivable and notes receivable. Differences are highlighted below. U.S. GAAP allows a fair value option for accounting for receivables. U.S. GAAP does not allow receivables to be accounted for as available for sale investments. U.S. GAAP requires more disaggregation of accounts and notes receivable in the balance sheet or notes, e.g., A/R from customers, from related parties, & from others. IFRS restricts the circumstances in which a fair value option for accounting for receivables is allowed. Until 2015, companies may account for receivables as available for sale investments if the approach is elected initially. After January 1, 2015, this treatment is no longer allowed.

47 7-47 Financing with Receivables Companies may use their receivables to obtain immediate cash.

48 Factoring Arrangements Selling Receivables to a Factor 7-48 SUPPLIER (Transferor) 2. Accounts Receivable 1. Merchandise RETAILER FACTOR (Transferee) A factor is a financial institution that buys receivables for cash, handles the billing and collection of the receivables from retailer, and charges a fee to Retailer for the service.

49 Sale of Receivables Meet All 3 Conditions to Be Classified as a Sale 7-49 Treat as a sale if all of these conditions are met: receivables are isolated from transferor (A/R owner). transferee (Factor) has right to pledge or exchange receivables. transferor does not have control over the receivables. Transferor cannot repurchase receivable before maturity. Transferor cannot require return of specific receivables.

50 Sale of Receivables 7-50 Without recourse An ordinary sale of receivables to the factor. 1. Factor assumes all risk of uncollectibility. 2. Control of receivable passes to the factor. 3. Receivables are removed from the books, fair value of cash and other assets received is recorded, and a financing expense or loss is recognized. With recourse Transferor (seller) retains risk of uncollectibility. If the transaction fails to meet the 3 conditions necessary to be classified as a sale, it will be treated as a secured borrowing, i.e., as if it is Using receivables as collateral for loans

51 Sale of Receivables (with recourse & without recourse) In December 2013, the Santa Teresa Glass Company factored accounts receivable that had a book value of $600,000 to Factor Bank. The transfer was made without recourse. Under this arrangement, Santa Teresa transfers the $600,000 of receivables to Factor, and Factor immediately remits to Santa Teresa cash equal to 90% of the factored amount (90% $600,000 = $540,000). Factor retains the remaining 10% (estimated to have a fair value of $50,000) to cover its factoring fee (equal to 4% of the total factored amount; 4% $600,000 = $24,000) and to provide a cushion against potential sales returns and allowances ,000 = 10,000 (ie.,60,000 50,000 FV) + 24,000 factoring fee Assume the same facts as above, except that Santa Teresa Glass sold the receivables to Factor with recourse and estimates the fair value of the recourse obligation (liability) to be $5,000.

52 Secured Borrowing Using receivables as collateral for loans On December 1, 2013, the Santa Teresa Glass Company borrowed $500,000 (liability) from Finance Bank and signed a promissory note. Interest at 12% is payable monthly. The company assigned $620,000 of its receivables (current asset) as collateral for the loan. Finance Bank charges a finance fee equal to 1.5% of the accounts receivable assigned. Cash (difference) 490,700 Finance charge expense (1.5% * $620,000) 9,300 Liability financing arrangement 500,000 Santa Teresa Glass (Borrower) will continue to collect the receivables, and will record any discounts, sales returns, and bad debt write-offs, but will remit the cash to Finance Bank (lender), usually on a monthly basis. When $400,000 of the receivables assigned are collected in December, Santa Teresa Glass records the following entries. Receivable: Cash 400,000 Accounts receivable 400,000 Loan: Interest expense ($500,000 * 12% * 1/12) 5,000 Liability financing arrangement 400,000 Cash 405,

53 7-53 Securitization: The process of transforming financial assets into securities. It involves: 1. the transfer of a portfolio of financial assets (such as trade receivables, mortgage loans notes receivables, auto loans) to a trust or other entity such as SPE Special Purpose Entity (SPE) or Qualifying Special Purpose Entity (QSPE). And 2. the sale of beneficial interests in that entity to investors. New rules eliminate QSPE and require consolidation!

54 Transfers of Financial Assets Sales It includes transfers of: 1. an entire financial assets 2. a group of entire financial assets, and 3. a participating interest in an entire financial asset A transfer of financial assets is a sale when the transferor relinquishes control. Continuing involvement is the right to receive benefits from the assets or an obligation to provide additional assets to a party related to the transfer; e.g., servicing agreement, recourse provisions. Participating Interests: A participating interest exists if: 1. It is a proportionate ownership interest, 2. Cash receipts are proportionate to shares of ownership 3. Each holder has the same priority, & 4. The entire asset cannot be pledged or exchanged without the agreement of all holders. It is a transfer of portion of a receivable or partial transfer. Example: transfer right to interest, but retain right to principal New rules require a partial transfer be treated as a secured borrowing, unless specific conditions are met! 7-54

55 Transfers (Discounts) of Notes Receivable 7-55 On December 31, Stridewell accepted a nine-month 10 percent note for $200,000 from a customer. 3 months later on March 31, Stridewell discounted the note at its local bank. The bank s discount rate is 12 percent. Before preparing the journal entry to record the discounting, Stridewell must record the accrued interest on the note from December 31 until March 31. Interest receivable 5,000 Interest revenue 5,000 $200,000 10% 3/12

56 7-56 Transfers of Notes Receivable Face amount of note receivable $ 200,000 Interest to maturity ($200,000 10% 9/12) 15,000 Maturity value of note receivable 215,000 Discount fee ($215,000 12% 6/12) (12,900) Cash proceeds $ 202,100 Cash 202,100 Loss on sale of note receivable 2,900 Notes receivable 200,000 Interest receivable 5,000 $205,000 $202,100

57 7-57 Deciding Whether to Account for a Transfer as a Sale or a Secured Borrowing Pledge: An arrangement for a co. transfer the receivables for custodial purpose. Secured: a co. assigns its receivables as collateral to borrow money; the a/c debtors are not notified.

58 U.S. GAAP vs. IFRS Treatment for Transfers of Receivables The U.S. GAAP and the IFRS approaches often lead to similar accounting treatment for transfers of receivables U.S. GAAP focuses on whether control of assets has shifted from the transferor to the transferee. IFRS requires a more complex decision process. The company has to: 1. have transferred the rights to receive the cash flows from the receivable, and 2. considers whether the company has transferred substantially all of the risks and rewards of ownership, and 3. whether the company has transferred control.

59 7-59 Receivables Management Receivables Turnover Ratio = Net Sales Average Accounts Receivable This ratio measures how many times a company converts its receivables into cash each year. Average Collection Period = 365 Receivables Turnover Ratio This ratio is an approximation of the number of days the average accounts receivable balance is outstanding.

60 7-60 Receivables Management Symantec Corp. vs. CA, Inc., comparison (All dollar amounts in millions) Symantec Corp. CA, Inc Accounts receivable (net) $ 1,013 $ 856 $ 849 $ 931 Net sales 6,190 4,429 Symantec Corp CA, Inc Industry Average Receivables turnover Average collection period days days 61.3 days

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company CURRENT RECEIVABLES Receivables are the amount owed to the organization by its customers and/or others. Current receivables will be collected within one year or the current operating cycle which ever is

More information

Chapter 7: Cash & Receivables L7 (pg 399 436)

Chapter 7: Cash & Receivables L7 (pg 399 436) Chapter 7: Cash & Receivables L7 (pg 399 436) UNDERSTANDING CASH AND ACCOUNTS RECEIVABLE How Do Companies Manage and Control Cash? Cash flow budgets help anticipate cash needs and minimize borrowing requirements

More information

Exam 3 Review. FV = PV (1 + i) n. Format. What to Bring/Remember. Time Value of Money. Solving for Other Variables Example. Solving for Other Values

Exam 3 Review. FV = PV (1 + i) n. Format. What to Bring/Remember. Time Value of Money. Solving for Other Variables Example. Solving for Other Values Format Exam 3 Review http://fates.cns.muskingum.edu/~ plaube/acct301/default.htm 15 questions Multiple choice (12) Essay (2) Problem (1) What to Bring/Remember What to bring Calculator I ll bring scrap

More information

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables.

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables. Chapter 7 Walk Through Balance Sheet Cash and Receivables Chapters 1 6 Accounting cycle: JE, AJE, financial stmts Conceptual framework, GAAP, revenue Time value of money concepts Remaining chapters (ACTG

More information

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements.

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements. Chapter 7 Cash and Receivables Skyline College Lecture Notes Pivotal Issues When Managing Cash and Receivables 1. Cash needs 2. Credit policies 3. Level of accounts receivable 4. Financing receivables

More information

CHAPTER 7 Cash and Receivables

CHAPTER 7 Cash and Receivables CHAPTER 7 Cash and Receivables 7-1 LECTURE OUTLINE Chapter 7, the first of six asset chapters, covers cash, accounts receivable, and notes receivable. Temporary investments (marketable securities) are

More information

Chapter 07 - Accounts and Notes Receivable. Chapter Outline

Chapter 07 - Accounts and Notes Receivable. Chapter Outline Chapter 07 - Accounts and Receivable I. Accounts Receivable A receivable is an amount due from another party. Accounts Receivable are amounts due from customers for credit sales. A. Recognizing Accounts

More information

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less. Accounting Fundamentals Lesson 5 5.0 Receivables & Investments Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

More information

128 SU 3: Financial Accounting I

128 SU 3: Financial Accounting I 128 SU 3: Financial Accounting I 3.5 FINANCIAL ASSETS AND LIABILITIES Definitions 1. Financial assets include cash, equity instruments of other entities (e.g., preference shares), contract rights to receive

More information

Sample Test Questions CHAPTER 7 CASH AND RECEIVABLES Answer No. Description MULTIPLE CHOICE Conceptual d 1. Identification of cash items. b 2. Identification of cash items. d 3. Classification of travel

More information

CHAPTER 9 ACCOUNTING FOR RECEIVABLES

CHAPTER 9 ACCOUNTING FOR RECEIVABLES CHAPTER 9 ACCOUNTING FOR RECEIVABLES LEARNING OBJECTIVES 1. IDENTIFY THE DIFFERENT TYPES OF RECEIVABLES. 2. EXPLAIN HOW COMPANIES RECOGNIZE ACCOUNTS RECEIVABLE. 3. DISTINGUISH BETWEEN THE METHODS AND BASES

More information

Intermediate Accounting

Intermediate Accounting Intermediate Accounting Thomas H. Beechy Schulich School of Business, York University Joan E. D. Conrod Faculty of Management, Dalhousie University PowerPoint slides by: Bruce W. MacLean, Faculty of Management,

More information

CHAPTER 8. Accounting for Receivables 5, 6, 7, 8, 9, 10, 11, 12, 13 5, 6, 7, 8, 9 14, 15, 16, 17 18, 19, 20, 21, 22 10, 11, 12, 13 13, 14, 15

CHAPTER 8. Accounting for Receivables 5, 6, 7, 8, 9, 10, 11, 12, 13 5, 6, 7, 8, 9 14, 15, 16, 17 18, 19, 20, 21, 22 10, 11, 12, 13 13, 14, 15 CHAPTER 8 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises Problems Set A Problems Set B 1. Record accounts receivable transactions. 1, 2,

More information

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400 BRIEF EXERCISE 8-1 (a) Other receivables. (b) Notes receivable. (c) Accounts receivable. BRIEF EXERCISE 8-2 (a) Accounts Receivable... 23,000 Sales Revenue... 23,000 (b) Sales Returns and Allowances...

More information

C H A P T E R. Receivables. Financial Accounting 14e. human/istock/360/getty Images. Warren Reeve Duchac

C H A P T E R. Receivables. Financial Accounting 14e. human/istock/360/getty Images. Warren Reeve Duchac human/istock/360/getty Images C H A P T E R 9 Receivables Financial Accounting 14e Warren Reeve Duchac Classification of Receivables The term receivables includes all money claims against other entities,

More information

Cash and Receivables. Chapter. Learning Objectives. Nature and Composition of Cash. Additional Cash Issues

Cash and Receivables. Chapter. Learning Objectives. Nature and Composition of Cash. Additional Cash Issues Learning Objectives Cash and Receivables No substantial departures from the text, Chapter 7. Chapter 7 7-1 UCSB, Anderson 7-2 UCSB, Anderson Nature and Composition of Cash Cash is classified as a... Current

More information

CHAPTER 7 ACCOUNTING FOR RECEIVABLES

CHAPTER 7 ACCOUNTING FOR RECEIVABLES CHAPTER 7 ACCOUNTING FOR RECEIVABLES Key Terms and Concepts to Know Accounts Receivable: Result from sales on account (credit sales), not cash sales. May also result from credit card sales if there is

More information

ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions

ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions PROBLEM 7-2 (a) Sales $1,980,000 Sales discounts 4,400 Sales returns and allowances 60,000 Net sales 1,915,600 Percentage 1 1/2% Bad debt expense

More information

CHAPTER 10 Reporting and Analyzing Liabilities. Accounting for Notes Payable Obligations in the form of written notes are recorded as notes payable.

CHAPTER 10 Reporting and Analyzing Liabilities. Accounting for Notes Payable Obligations in the form of written notes are recorded as notes payable. CHAPTER 10 Reporting and Analyzing Liabilities Accounting for Notes Payable Obligations in the form of written notes are recorded as notes payable. Notes payable usually require the borrower to pay interest

More information

CHAPTER 7. Cash and Receivables. 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 8, 9, 10, 11, 12

CHAPTER 7. Cash and Receivables. 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 8, 9, 10, 11, 12 CHAPTER 7 Cash and Receivables ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 2. Accounting

More information

Chapter 8 Accounting for Receivables 高立翰

Chapter 8 Accounting for Receivables 高立翰 Chapter 8 Accounting for Receivables 高立翰 Study Objectives 1. Identify the different types of receivables. 2. Explain how companies recognize accounts receivable. 3. Distinguish between the methods and

More information

Chapter 8. Reporting and Analyzing Receivables

Chapter 8. Reporting and Analyzing Receivables Chapter 8 Reporting and Analyzing Receivables Study Objective 1 - Identify the Different Types of Receivables The term receivables refers to amounts due from individuals and companies. Receivables are

More information

ANSWERS TO QUESTIONS

ANSWERS TO QUESTIONS ANSWERS TO QUESTIONS 01. The three major types and classification of receivables are as follows: Type Classification (1) Accounts receivable Current asset (2) Notes receivable Current or noncurrent asset

More information

CHAPTER 7. Cash and Receivables 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 20, 22, 23, 24 17, 18, 19 8, 9, 10, 11, 12

CHAPTER 7. Cash and Receivables 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 20, 22, 23, 24 17, 18, 19 8, 9, 10, 11, 12 CHAPTER 7 Cash and Receivables ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Accounting for cash. 1, 2, 3, 4, 21, 22, 23, 24 1

More information

Investments Advance to subsidiary company 81,000

Investments Advance to subsidiary company 81,000 EXERCISE 7-3 (10 15 minutes) Current assets Accounts receivable Customers Accounts (of which accounts in the amount of $40,000 have been pledged as security for a bank loan) $79,000 Installment accounts

More information

Chapter 8: account receivable

Chapter 8: account receivable Chapter 8: account receivable Three accounting issues associated with accounts receivable are: 1. Recognizing accounts receivable 2. Valuing accounts receivable 3. Disposing of accounts receivable Recognizing

More information

Investments and advances... 313,669

Investments and advances... 313,669 Consolidated Financial Statements of the Company The consolidated balance sheet, statement of income, and statement of equity of the Company are as follows. Please note the Company s consolidated financial

More information

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 BUS312A/612A Financial Reporting I Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 Chapter 7- You should be able to: Identify elements of cash Identify the types of receivables Explain accounting

More information

Short-Term Investments & Receivables. Pr. Zoubida SAMLAL

Short-Term Investments & Receivables. Pr. Zoubida SAMLAL Short-Term Investments & Receivables Pr. Zoubida SAMLAL Learning Objective 1 Account for short-term investments Account for short-term investments Accounting for Short-Term Investments Also called marketable

More information

Financial Reporting and Analysis Chapter 8 Solutions Receivables. Exercises

Financial Reporting and Analysis Chapter 8 Solutions Receivables. Exercises Exercises E8-1. Account analysis (AICPA adapted) Financial Reporting and Analysis Chapter 8 Solutions Receivables Exercises To find the amount of gross sales, start by determining credit sales. We can

More information

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 BUS312A/612A Financial Reporting I Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 Chapter 7- You should be able to: Identify elements of cash Identify the types of receivables Explain accounting

More information

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows Sri Lanka Accounting Standard-LKAS 7 Statement of Cash Flows CONTENTS SRI LANKA ACCOUNTING STANDARD-LKAS 7 STATEMENT OF CASH FLOWS paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS

More information

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2 Chapter 7 Solutions EXERCISES Exercise 7 2 Cash and cash equivalents includes: Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total

More information

Chapter 7 Cash and Receivables

Chapter 7 Cash and Receivables Chapter 7 Cash and Receivables QUESTIONS FOR REVIEW OF KEY TOPICS Question 7-1 Cash equivalents usually include negotiable instruments as well as highly liquid investments that have a maturity date no

More information

Chapter 8. Receivables

Chapter 8. Receivables Chapter 8 Receivables Receivables mean amounts owed to the company by others. Accounts Receivable are receivables resulting from the company rendering services or selling products to the public. The company

More information

Chapter 8. Reporting and Analyzing Receivables. Study Objectives

Chapter 8. Reporting and Analyzing Receivables. Study Objectives Reporting and Analyzing Receivables Study Objectives Identify the different types of receivables. Explain how accounts receivable are recognized in the accounts. Describe the methods used to account for

More information

Sales and Accounts Receivable. Reporting and Analyzing Receivables. Study Objectives

Sales and Accounts Receivable. Reporting and Analyzing Receivables. Study Objectives Reporting and Analyzing Receivables Study Objectives Identify the different types of receivables. Explain how accounts receivable are recognized in the accounts. Describe the methods used to account for

More information

ASPE AT A GLANCE Section 3856 Financial Instruments

ASPE AT A GLANCE Section 3856 Financial Instruments ASPE AT A GLANCE Section 3856 Financial Instruments December 2014 Section 3856 Financial Instruments Effective Date Fiscal years beginning on or after January 1, 2011 1 SCOPE Applies to all financial instruments

More information

C. Valuing Accounts Receivable.

C. Valuing Accounts Receivable. C. Valuing Accounts Receivable. 1. Valuing receivables involves reporting them at their cash (net) realizable value. Cash (net) realizable value is the net amount expected to be received in cash. 2. Uncollectible

More information

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Contents Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS 6 9 Cash and cash equivalents 7 9 PRESENTATION OF

More information

CHAPTER 8 WHEN REVENUE IS RECOGNIZED RECOGNIZED HOW REVENUE IS REVENUE CYCLE: SALES, RECEIVABLES, AND CASH

CHAPTER 8 WHEN REVENUE IS RECOGNIZED RECOGNIZED HOW REVENUE IS REVENUE CYCLE: SALES, RECEIVABLES, AND CASH CHAPTER 8 REVENUE CYCLE: SALES, RECEIVABLES, AND CASH 1 WHEN REVENUE IS RECOGNIZED Revenue should be recognized when two criteria are met: The promised work has been substantially completed Cash, or a

More information

9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle

9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle 9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle 9.1 Current Assets and 9.1.1 Cash A firm should maintain as little cash as possible, because cash is a nonproductive asset. It earns no

More information

Chapter 21 The Statement of Cash Flows Revisited

Chapter 21 The Statement of Cash Flows Revisited Chapter 21 The Statement of Cash Flows Revisited AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments,

More information

CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS

CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS LEARNING OBJECTIVES 1. IDENTIFY THE DIFFERENCES BETWEEN SERVICE AND MERCHANDISING COMPANIES. 2. EXPLAIN THE RECORDING OF PURCHASES UNDER A PERPETUAL INVENTORY

More information

Accounting for Receivables

Accounting for Receivables Introduction to Accounting 2 Modul 2 Accounting for Receivables After studying this chapter, you should be able to: 1. Identify the different types of receivables. 2. Explain how accounts receivable are

More information

Most economic transactions involve two unrelated entities, although

Most economic transactions involve two unrelated entities, although 139-210.ch04rev.qxd 12/2/03 2:57 PM Page 139 CHAPTER4 INTERCOMPANY TRANSACTIONS LEARNING OBJECTIVES After reading this chapter, you should be able to: Understand the different types of intercompany transactions

More information

Current assets. assets that are expected to be converted into cash within one year or within the operating cycle of an entity

Current assets. assets that are expected to be converted into cash within one year or within the operating cycle of an entity CHAPTER 7 Current assets assets that are expected to be converted into cash within one year or within the operating cycle of an entity Chapter 7 Mugan-Akman 2007 2-40 Current Asset Section of a Balance

More information

www.cebu-cpar.com Based on the above and the result of your audit, determine the adjusted balance of following:

www.cebu-cpar.com Based on the above and the result of your audit, determine the adjusted balance of following: CEBU CPAR CENTER, INC. AUDIT OF RECEIVABLES PROBLEM NO. 1 Your audit disclosed that on December 31, 2006, the accounts receivable control account of Alilem Company had a balance of P2,865,000. An analysis

More information

Chapter 9. Accounting for Receivables. McGraw-Hill/Irwin

Chapter 9. Accounting for Receivables. McGraw-Hill/Irwin Chapter 9 Accounting for Receivables Conceptual Learning Objectives C1: Describe accounts receivable and how they occur and are recorded C2: Describe a note receivable and the computation of its maturity

More information

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS NAS 03 NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS CONTENTS Paragraphs OBJECTIVE SCOPE 1-3 BENEFITS OF CASH FLOWS INFORMATION 4-5 DEFINITIONS 6-9 Cash and cash equivalents 7-9 PRESENTATION OF A

More information

Notes. 351 Spring 2011. Accounting. Uncollectible Accounts. Matching. Direct Write-Off Method

Notes. 351 Spring 2011. Accounting. Uncollectible Accounts. Matching. Direct Write-Off Method Notes Chapter 7 ccounting 351 Spring 2011 California State University, Northridge 1 Uncollectible ccounts Direct Write-Off Method Bad Debt Expense 1,000 ccounts Receivable 1,000 Matching llowance Method

More information

Chapter 10: Revenue Recognition and Valuation of Receivables

Chapter 10: Revenue Recognition and Valuation of Receivables Chapter 10: Revenue Recognition and Valuation of Receivables The timing of revenue recognition Valuation of receivables; VAT Accounting for bad debt Refinancing receivables before the due date Receivables

More information

International Accounting Standard 7 Statement of cash flows *

International Accounting Standard 7 Statement of cash flows * International Accounting Standard 7 Statement of cash flows * Objective Information about the cash flows of an entity is useful in providing users of financial statements with a basis to assess the ability

More information

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS APPROVED by Resolution No. 11 of 27 October 2004 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS

More information

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Liabilities 7 Accounting for and Presentation of Liabilities Liabilities are obligations of the entity or, as defined by the FASB, probable future sacrifices of economic benefits arising from present obligations of

More information

Statement of Cash Flows: Reporting and Analysis

Statement of Cash Flows: Reporting and Analysis Statement of Cash Flows: Reporting and Analysis Statement of Cash Flows: Reporting and Analysis Copyright 2014 by DELTACPE LLC All rights reserved. No part of this course may be reproduced in any form

More information

International Accounting Standard 39 Financial Instruments: Recognition and Measurement

International Accounting Standard 39 Financial Instruments: Recognition and Measurement EC staff consolidated version as of 18 February 2011 FOR INFORMATION PURPOSES ONLY International Accounting Standard 39 Financial Instruments: Recognition and Measurement Objective 1 The objective of this

More information

CHAPTER15. Long-Term Liabilities. Acct202 15-1

CHAPTER15. Long-Term Liabilities. Acct202 15-1 CHAPTER15 Long-Term Liabilities Acct202 15-1 15-2 PreviewofCHAPTER15 Bond Basics Bonds are a form of interest-bearing notes payable. Three advantages over common stock: 1. Stockholder control is not affected.

More information

Receivables: Definition

Receivables: Definition Receivables: Definition Definition: Receivables are financial instruments according to the definition in IAS 32.11: A financial instrument is any contract that gives rise to a financial asset of one entity

More information

CHAPTER 23. Statement of Cash Flows 1, 2, 7, 8, 12 3, 4, 5, 6, 16, 17, 19 9, 20 4, 5, 9, 10, 11 10, 13, 15, 16. 7. Worksheet adjustments.

CHAPTER 23. Statement of Cash Flows 1, 2, 7, 8, 12 3, 4, 5, 6, 16, 17, 19 9, 20 4, 5, 9, 10, 11 10, 13, 15, 16. 7. Worksheet adjustments. CHAPTER 23 Statement of Cash Flows ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Format, objectives purpose, and source of statement.

More information

Chapter 11. Long-Term Liabilities Notes, Bonds, and Leases

Chapter 11. Long-Term Liabilities Notes, Bonds, and Leases 1 Chapter 11 Long-Term Liabilities Notes, Bonds, and Leases 2 Long-Term Liabilities 3 Economic Consequences of Reporting Long-Term Liabilities Improved credit ratings can lead to lower borrowing costs

More information

BANK OVERDRAFTS IMPAIRMENT EVALUATION PROCESS CASH AND RECEIVABLES U.S. GAAP PERSPECTIVE

BANK OVERDRAFTS IMPAIRMENT EVALUATION PROCESS CASH AND RECEIVABLES U.S. GAAP PERSPECTIVE Chapter 7 Cash and Receivables 7 1 CHAPTER 7 CASH AND RECEIVABLES This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS) for

More information

To find the amount of gross sales, start by determining credit sales. We can do this with the accounts receivable T-account below.

To find the amount of gross sales, start by determining credit sales. We can do this with the accounts receivable T-account below. E8-1. Analyzing accounts receivable (AICPA adapted) To find the amount of gross sales, start by determining credit sales. We can do this with the accounts receivable T-account below. Accounts Receivable

More information

Assessment Questions

Assessment Questions Assessment Questions AS-1 ( 1 ) Define accounts receivable. The amount billed to customers and owing from them but not yet collected. AS-2 ( 1 ) Describe the presentation of accounts receivable on the

More information

Accounting 201 Comprehensive Practice Exam 2C Page 1

Accounting 201 Comprehensive Practice Exam 2C Page 1 Accounting 201 Comprehensive Practice Exam 2C Page 1 1. A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the

More information

Accounting Self Study Guide for Staff of Micro Finance Institutions

Accounting Self Study Guide for Staff of Micro Finance Institutions Accounting Self Study Guide for Staff of Micro Finance Institutions LESSON 2 The Balance Sheet OBJECTIVES The purpose of this lesson is to introduce the Balance Sheet and explain its components: Assets,

More information

Accounting Norms and Principles January 7, 2003

Accounting Norms and Principles January 7, 2003 1 Accounting Norms and Principles January 7, 2003 The purpose of an accounting system is to provide credit union management with complete and accurate financial information that can be used to operate

More information

Financial Accounting. John J. Wild. Sixth Edition. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Financial Accounting. John J. Wild. Sixth Edition. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Accounting John J. Wild Sixth Edition McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 07 Reporting and Analyzing Receivables Conceptual Learning

More information

Chapter 8 Accounting for Receivables

Chapter 8 Accounting for Receivables Chapter 8 Accounting for Receivables Accounts Receivable Accounts Receivables are current assets. They are usually expected to be collected within 30 days. Allowance Method and Bad Debt Expense 2 methods:

More information

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940 1. David Company uses the gross method to record its credit purchases, and it uses the periodic inventory system. On July 21, 20D, the company purchased goods that had an invoice price of $ with terms

More information

Understanding Financial Statements. For Your Business

Understanding Financial Statements. For Your Business Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

ACCOUNTING 1 (ACN101- M)

ACCOUNTING 1 (ACN101- M) 1 ACCOUNTING 1 (ACN101- M) STUDY UNIT 1: THE NATURE AND FUNCTION OF ACCOUNTING DEFINITION: Accounting can be defined as the orderly & systematic recording of the monetary values of financial transactions

More information

INDEX TO FINANCIAL STATEMENTS. Balance Sheets as of June 30, 2015 and December 31, 2014 (Unaudited) F-2

INDEX TO FINANCIAL STATEMENTS. Balance Sheets as of June 30, 2015 and December 31, 2014 (Unaudited) F-2 INDEX TO FINANCIAL STATEMENTS Page Financial Statements Balance Sheets as of and December 31, 2014 (Unaudited) F-2 Statements of Operations for the three months ended and 2014 (Unaudited) F-3 Statements

More information

Consolidated Financial Statements

Consolidated Financial Statements Consolidated Financial Statements For the year ended February 20, 2016 Nitori Holdings Co., Ltd. Consolidated Balance Sheet Nitori Holdings Co., Ltd. and consolidated subsidiaries As at February 20, 2016

More information

Investments and advances... 344,499

Investments and advances... 344,499 Consolidated Financial Statements of the Company The consolidated balance sheet, statement of income, and statement of equity of the Company are as follows. Please note the Company s consolidated financial

More information

Accounting for Merchandising Operations

Accounting for Merchandising Operations Instructor: masum 5-1 Bangladesh University of Textiles 5 Accounting for Merchandising Operations Learning Objectives After studying this chapter, you should be able to: [1] Identify the differences between

More information

B Exercises 4-1. (d) Intangible assets. (i) Paid-in capital in excess of par.

B Exercises 4-1. (d) Intangible assets. (i) Paid-in capital in excess of par. B Exercises E4-1B (Balance Sheet Classifications) Presented below are a number of balance sheet accounts of Castillo Inc. (a) Trading Securities. (h) Warehouse in Process of Construction. (b) Work in Process.

More information

Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased.

Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased. Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased. Accounts Receivable are the total amounts customers owe your business for goods or services sold

More information

310-10-00 Status. General

310-10-00 Status. General Checkpoint Contents Accounting, Audit & Corporate Finance Library Standards and Regulations FASB Codification Codification Assets 310 Receivables 310-10 Overall 310-10-00 Status Copyright 2014 by Financial

More information

Understanding A Firm s Financial Statements

Understanding A Firm s Financial Statements CHAPTER OUTLINE Spotlight: J&S Construction Company (http://www.jsconstruction.com) 1 The Lemonade Kids Financial statement (accounting statements) reports of a firm s financial performance and resources,

More information

Cash Flow Statements

Cash Flow Statements Compiled Accounting Standard AASB 107 Cash Flow Statements This compiled Standard applies to annual reporting periods beginning on or after 1 July 2007. Early application is permitted. It incorporates

More information

Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises

Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises Exercises E17-1. Determining cash flows from operations Using the indirect method, cash flow from operations is computed

More information

Statement of Cash Flows

Statement of Cash Flows HKAS 7 Revised February November 2014 Hong Kong Accounting Standard 7 Statement of Cash Flows HKAS 7 COPYRIGHT Copyright 2014 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial

More information

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL)

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Page 1 ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Complete these sample exam problems/objective questions and check your answers with the solutions at the end of the review file and identify where

More information

Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities

Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities Illustrative Financial Statements This component of the toolkit contains sample financial

More information

Statement of Cash Flows

Statement of Cash Flows STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 7 Statement of Cash Flows This version of SB-FRS 7 does not include amendments that are effective for annual periods beginning after 1 January 2014.

More information

Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010

Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010 Dumfries Mutual Insurance Company Financial Statements For the year ended December 31, 2010 Contents Independent Auditors' Report 2 Financial Statements Balance Sheet 3 Statement of Operations and Unappropriated

More information

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Contents Paragraphs Objective 1 Scope 2 7 Definitions 8 9 Embedded derivatives 10 13 Recognition and derecognition

More information

Securitization Accounting

Securitization Accounting !@ # Securitization Accounting David N. Thrope (212) 773-0930 david.thrope@ey.com Agenda Securitization Basics Sale Criteria Consolidation Gain on Sale Sample Transaction 2 Securitization Basics 3 What

More information

CHAPTER 14. Long-Term Liabilities 1, 10, 14, 20 2, 3, 4, 9, 10, 11 1, 2, 3, 4, 5, 6, 7 5, 6, 7, 8, 11 3, 4, 6, 7, 8, 10 12, 13 11 12, 13, 14, 15

CHAPTER 14. Long-Term Liabilities 1, 10, 14, 20 2, 3, 4, 9, 10, 11 1, 2, 3, 4, 5, 6, 7 5, 6, 7, 8, 11 3, 4, 6, 7, 8, 10 12, 13 11 12, 13, 14, 15 CHAPTER 14 Long-Term Liabilities ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Long-term liability; classification; definitions.

More information

CAPITAL ONE INVESTING, LLC (An Indirect Wholly Owned Subsidiary of Capital One Financial Corporation) Period Ended June 30, 2015.

CAPITAL ONE INVESTING, LLC (An Indirect Wholly Owned Subsidiary of Capital One Financial Corporation) Period Ended June 30, 2015. S T A T E M E N T O F F I N A N C I A L C O N D I T I O N Period Ended June 30, 2015 (Unaudited) Contents Statement of Financial Condition (Unaudited)...1 Notes to Statement of Financial Condition...2

More information

C&I LOAN EVALUATION UNDERWRITING GUIDELINES. A Whitepaper

C&I LOAN EVALUATION UNDERWRITING GUIDELINES. A Whitepaper C&I LOAN EVALUATION & UNDERWRITING A Whitepaper C&I Lending Commercial and Industrial, or C&I Lending, has long been a cornerstone product for many successful banking institutions. Also known as working

More information

Financial Statements Together with Report of Independent Certified Public Accountants FJC. March 31, 2015 and 2014

Financial Statements Together with Report of Independent Certified Public Accountants FJC. March 31, 2015 and 2014 Financial Statements Together with Report of Independent Certified Public Accountants FJC TABLE OF CONTENTS Page Report of Independent Certified Public Accountants 1-2 Financial Statements Statements of

More information

HARMONIC DRIVE SYSTEMS INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2013

HARMONIC DRIVE SYSTEMS INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2013 HARMONIC DRIVE SYSTEMS INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2013 HARMONIC DRIVE SYSTEMS INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS

More information

Assuming office supplies are charged to the Office Supplies inventory account when purchased:

Assuming office supplies are charged to the Office Supplies inventory account when purchased: Adjusting Entries Prepaid Expenses Second Bullet Example - Assuming office supplies are charged to the Office Supplies inventory account when purchased: Office supplies expense 7,800 Office supplies 7,800

More information

CHAPTER 6. Accounting and the Time Value of Money. 2. Use of tables. 13, 14 8 1. a. Unknown future amount. 7, 19 1, 5, 13 2, 3, 4, 7

CHAPTER 6. Accounting and the Time Value of Money. 2. Use of tables. 13, 14 8 1. a. Unknown future amount. 7, 19 1, 5, 13 2, 3, 4, 7 CHAPTER 6 Accounting and the Time Value of Money ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems 1. Present value concepts. 1, 2, 3, 4, 5, 9, 17 2. Use of

More information

RAPID REVIEW Chapter Content

RAPID REVIEW Chapter Content RAPID REVIEW BASIC ACCOUNTING EQUATION (Chapter 2) INVENTORY (Chapters 5 and 6) Basic Equation Assets Owner s Equity Expanded Owner s Owner s Assets Equation = Liabilities Capital Drawing Revenues Debit

More information