1. Chapter 2 Cash and Receivables
第二章 现金及应收款
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2. Part A Cash and Cash Equivalents
In this part, we are going to learn:
Cash
Cash equivalents
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3. 现金包括纸币、硬币、银行支票存款账户的余额以及可以存入这些账户的款项。
Cash
Cash includes currency and coins, balances in checking accounts, and items acceptable for deposit in these accounts.
现金包括纸币、硬币、银行支票存款账户的余额以及可以存入这些账户的款项。
Simply, “cash”=money hold in hand + money in the bank
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4. 现金等价物包括货币市场基金、国库券和商业票据等。
Cash Equivalents
Cash Equivalents include money market funds, treasury bills, and commercial paper.
现金等价物包括货币市场基金、国库券和商业票据等。
The maturity date (到期日) for cash equivalents should be no longer than three months from the date of purchase.
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5. Part B Current Receivables 短期应收款
In this part, we are going to learn:
The classification of “Receivables”
Accounts receivable
Notes receivable
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6. Receivables
Receivables are a company’s claims to the future collection of cash, other assets or services. 应收款是企业在未来要求收取现金、其他资产或者服务的权利。
Trade receivables 商业应收款: resulting from the sale of goods or services.
Exp. Accounts Receivable
Receivables
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Nontrade receivables 非商业应收款: not resulting from the sale of goods or services.
Exp. Interest Receivable

7. Accounts receivable are coming from credit sale (赊销).
Accounts receivable are supported by the customer’s credit and an invoice.
Notes receivable are supported by the note and an invoice.
Accounts receivable are classified as current assets, because their collection period (收款期) is usually less than one year.
AR are recognized on the day when we deliver the goods/services.
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8. Initial Valuation of Accounts Receivable 应收账款的初始计量
Two parts will be discussed:
Trade discounts
Cash discounts
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9. 商业折扣：公司为顾客提供的、从零售价中扣减一定百分比的折扣。(价格扣减)
Trade Discounts
Trade Discounts: a percentage reduction from the list price that companies offer to their customers. (price reduction)
商业折扣：公司为顾客提供的、从零售价中扣减一定百分比的折扣。(价格扣减)
Trade discounts are often offered to those customers who purchase goods/services in large quantity.
In accounting, we use “net price” to record AR and sales revenue.
Net price=full price – trade discount
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10. Trade Discounts
Exp. A company sells a machine at a price of $2,500, but sells it to a customer at list less a 10% discount. (credit sale)
Net price=full price-trade discount=$2,500-$2500×10%=$2,250
Dr. Accounts Receivable 2,250
Cr. Sales Revenue ,250
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11. 现金折扣：又称为销售折扣，它并不是对商品或劳务销售价格的减少，而是对赊购客户在特定的期间内付款而给予应付款金额的减少。(应付款的减少)
Cash Discounts
Cash Discounts: often called sales discounts, represent reductions not in the selling price of a good or service but in the amount to be paid by a credit customer if paid within a specified period of time. (reduction in payment)
现金折扣：又称为销售折扣，它并不是对商品或劳务销售价格的减少，而是对赊购客户在特定的期间内付款而给予应付款金额的减少。(应付款的减少)
It is a discount intended to provide incentive for quick payment. (encourage customers to pay the cash as soon as possible)
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12. Exp. Our company offered cash discount: 2/10, n/30.
Cash Discounts
Exp. Our company offered cash discount: 2/10, n/30.
2/10, meaning a 2% discount if paid within 10 days. (10 days---discount period)
n/30, meaning no discount if paid within 30 days.
Two ways to record cash discounts:
Gross method
Net method
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13. How to use gross method:
At first, use the full price to record accounts receivable.
If the cash discount is realized (within discount period), then put the discount amount into “sales discount”.
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14. Example of gross method
Our company’s credit terms are stated as 2/10, n/30. On Oct. 5, 2011, we sold merchandise at a price of $20,000. The customer paid 70% of its total price on Oct. 14 and the remaining balance of $6,000 on Nov. 4.
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15. Net method 净价法 How to use net method:
At first, use the net price to record accounts receivable.
If the cash discount is not realized (beyond discount period), then record the discount amount as “interest revenue”.
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16. Example of net method
Our company’s credit terms are stated as 2/10, n/30. On Oct. 5, 2011, we sold merchandise at a price of $20,000. The customer paid 70% of its total price on Oct. 14 and the remaining balance of $6,000 on Nov. 4.
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17. Gross Method V.S. Net Method
The gross method supposes all the cash discounts can not be taken. 总价法假设所有的现金折扣都不能被享受。
But if cash discount is taken, then put the discount amount into “sales discounts”.
The net method supposes all the cash discounts can be taken. 净价法假设所有的现金折扣都可以被享受。
But if cash discount is not taken, then put the discount amount into “interest revenue”.
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18. Gross Method V.S. Net Method
In America, most companies use the gross method because it’s easier than the net method.
But in China, only the gross method is allowed to use.
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19. Comparing trade discounts & cash discounts
Trade discounts are often offered to those customers who purchase goods/services in large quantity.
Cash discounts are offered to those customers who pay the cash within the discount period.
The purpose of trade discounts is to encourage large purchase.
The purpose of cash discounts is to encourage quick payment.
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20. Comparing trade discounts & cash discounts
Trade discounts are expressed as percentage reduction from price. (exp. 20% of trade discount)
Cash discounts are expressed as terms of 2/10, n/30.
Trade discounts only has one way to record: use the net price to record the accounts receivable and the revenue.
Cash discounts has two ways to record: gross method & net method.
Exercise: P85 E2-4
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21. Uncollectible accounts receivable
Uncollectible accounts receivable(无法收回的应收账款) or bad debts(坏账): receivables that some customers are either unable or unwilling to pay.
The costs which arise from uncollectible accounts are bad debt expense(坏账损失).
causes
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Bad debts
Bad debt expense

22. Uncollectible accounts receivable
Two ways to record bad debts:
Direct write-off method(直接转销法)
Allowance method(备抵法)
Two questions we need to focus on:
When to use this method?
How to use this method?
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23. Direct write-off method 直接转销法
When to use direct write-off method?
If uncollectible accounts receivable are immaterial (amount of bad debts is small)
Or if we can not reliably estimate 不能合理估计 the amount of uncollectible accounts receivable
How to use direct write-off method?
When accounts receivable actually become bad debts, just simply increase bad debt expense and decrease accounts receivable.
100% sure money can not be received
Dr: bad debt expense
Cr: accounts receivable
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24. Example of direct write-off method
In 2011, one of our customers went bankrupt (破产), he was unable to pay the debt $10,000 (which were our company’s accounts receivable). Suppose $10,000 are immaterial amount for our company.
Use direct write-off method
Dr. Bad debt expense 10,000
Cr. Accounts receivable 10,000
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25. When to use allowance method?
If uncollectible accounts receivable are material amount (amount of bad debts is large)
And if we can reliably estimate 能合理估计 the amount of uncollectible accounts receivable
How to use allowance method?
First estimate the amount of probable bad debts 估计可能发生坏账的金额
Put it into “allowance for uncollectible accounts” （坏账准备）
Dr: bad debt expense
Cr: allowance for UA
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26. Allowance for uncollectible accounts
Allowance method
Allowance for uncollectible accounts
Also called “allowance for doubtful accounts”
A contra account (备抵账户) to accounts receivable
Allowance for uncollectible accounts
Beginning Bal.
Cr.
Increase
Dr.
Decrease
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Ending Bal.

27. Three events under allowance method: (备抵法下的“三个”会计事件)
Estimate the amount of probable bad debts 估计可能发生坏账的金额
When accounts are deemed uncollectible 坏账真实发生
When previously written-off accounts are collected 之前的坏账重新收回
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28. Estimate the amount of probable bad debts
Three ways to estimate the amount of future bad debts: 三种估计坏账的方法
Income statement approach 利润表法
Balance sheet approach 资产负债表法
A combination of two approaches 两种方法的组合
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29. Income statement approach 利润表法
How to use income statement approach?
We estimate bad debt expense as a percentage of each period’s net credit sales. (按每期净赊销销售收入的百分比估计“坏账费用”)
Bad debt expense=credit sales × P%
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30. Example of income statement approach
P55 illustration 2-3
Bad debt expense=credit sales × P%
In this case, Bad debt expense=$1,200,000 × 2%=$24,000
Dr. Bad debt expense 24,000
Cr. Allowance for uncollectible accounts 24,000
Accounts receivable $305,000
Less: Allowance for uncollectible accounts (24,000)
Net accounts receivable (NRV of AR) $281,000
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It will be reported in the balance sheet.

31. Balance sheet approach 资产负债表法
How to use balance sheet approach? (two ways)
We estimate uncollectible accounts as a percentage of the receivable balance. (按总应收账款余额的百分比估计坏账)
Allowance for uncollectible accounts=the total AR × P%
Or, applying different percentages to accounts receivable balances. (对不同应收账款余额应用不同的百分比)
Allowance for uncollectible accounts=AR1 × P1%+AR2 × P2%+ AR3 × P3%+……+ ARn × Pn%
AR1, AR2, AR3, …, ARn are different accounts receivable balances depending on the length of time outstanding. 按应收账款的账龄长短划分不同的余额 (exp. P56)
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32. Example of balance sheet approach
Exp. P56 illustration 2-3A
Accounts Receivable Aging Schedule 应收账款账龄分析表
Allowance for uncollectible accounts=AR1 × P1%+AR2 × P2%+ AR3 × P3%+……+ ARn × Pn%
Allowance for uncollectible accounts=AR1 × P1%+AR2 × P2%+ AR3 × P3%+ AR4 × P4%
=220,000×5%+50,000×10%+25,000×20%+10,000×45%=25,500
The longer the account receivable has been outstanding the more likely it will prove uncollectible. 应收账款拖欠的时间越长，越有可能成为坏账。（坏账提取比率应该越大）
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33. Example of balance sheet approach
Exp. P56 illustration 2-3A
Allowance for uncollectible accounts=$25,500
Dr. Bad debt expense 25,500
Cr. Allowance for uncollectible accounts 25,500
Here, $25,500 is the ending bal. for “allowance for uncollectible accounts”
Allowance for uncollectible accounts
First year of operations
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Beginning Bal. 0
Cr ,500
Increase
Dr.
Decrease
Ending Bal ,500

34. Example of balance sheet approach
let’s suppose it was not the first year of operations. The beginning credit bal. for the allowance account was $4,000.
Dr. Bad debt expense 21,500
Cr. Allowance for uncollectible accounts 21,500
Allowance for uncollectible accounts
Beginning Bal. 4,000
Cr ,500
Increase
Dr.
Decrease
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Ending Bal ,500

35. Example of balance sheet approach
let’s suppose it was not the first year of operations. The beginning debit bal. for the allowance account was $4,000.
Dr. Bad debt expense 29,500
Cr. Allowance for uncollectible accounts 29,500
Allowance for uncollectible accounts
Beginning Bal. 4,000
Dr.
Decrease
Cr ,500
Increase
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Ending Bal ,500

36. A combination of two approaches
Some companies use a combination of two approaches. 有些公司使用两种方法的组合。
They use the income statement approach at the end of every month.
But they use the balance sheet approach at the end of the year.
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37. A combination of two approaches
Exp. Suppose 2011 is the first year of operation. During 2011, sales on credit are $1,200,000. The company anticipates that 2% of all credit sales will finally become uncollectible.
Using income statement approach at the end of every month:
Bad debt expense=S1×2%+S2×2%+...+S12×2%=(S1+ S2+…+ S12)×2%=SYear×2%
Bad debt expense=$1,200,000×2%=24,000
Dr. Bad debt expense 24,000
Cr. Allowance for uncollectible accounts 24,000
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38. A combination of two approaches
Use balance sheet approach at the end of the year:
Allowance for uncollectible accounts=AR1 × P1%+AR2 × P2%+ AR3 × P3%+……+ ARn × Pn%
Allowance for uncollectible accounts=220,000×5%+50,000×10%+25,000×20%+10,000×45%=25,500
Age Group
Amount P%
0-60 days
220,000 5%
61-90 days
50,000
10%
days
25,000
20%
Over 120 days
10,000
45%
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39. A combination of two approaches
Allowance for uncollectible accounts=220,000×5%+50,000×10%+25,000×20%+10,000×45%=25,500 (ending bal.)
Suppose this year is the company’s first year, so beginning bal.=0.
Allowance for uncollectible accounts
Using income statement approach
Beginning Bal. 0
Cr ,000
1,500
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Dr.
Decrease
Using balance sheet approach
Ending Bal ,500

40. A combination of two approaches
Dr. bad debt expense 1,500
Cr. Allowance for uncollectible accounts 1,500
Accounts receivable $305,000
Less: Allowance for uncollectible accounts IS (24,000)
Allowance for uncollectible accounts BS (1,500)
Net accounts receivable $279,500
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41. When accounts are deemed uncollectible 坏账真实发生
If we are sure that part of accounts receivable will not be collected, then record it as a debit to allowance for uncollectible accounts and a credit to accounts receivable.
100% sure money can not be received (actually become bad debts)
Dr: Allowance for UA
Cr: Accounts receivable
Exp. Assume that actual bad debts in 2012 are $25,000, (we are 100% sure that in 2012, $25,000 will not be received)
Dr. Allowance for uncollectible accounts 25,000
Cr. Accounts receivable ,000
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42. When previously written-off accounts are collected 之前的坏账重新收回
Sometimes, accounts receivable that have become bad debts will be collected in part or in full.
When this happens, the receivable and the allowance should be reinstated. 当坏账重新收回时，应收账款和坏账准备应该予以恢复。
Exp. Assume that the previous bad debts of $1,200 is collected this year.
Dr. Accounts receivable 1,200
Cr. Allowance for uncollectible account 1,200
Dr. cash 1,200
Cr. Accounts receivable 1,200
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43. Exercise
P86 E2-9
P86 E2-8
P86 E2-11
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44. Financing with receivables
In this part, we are going to learn:
Secured borrowing 担保借款
Sale of receivables 应收款的出售
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45. 担保借款：转让人以应收款为抵押 (collateral)向出让人贷款。
Secured borrowing
Secured borrowing: the transferor (borrower) borrowed money from transferee (lender), with the receivables serving as collateral for the loan.
担保借款：转让人以应收款为抵押 (collateral)向出让人贷款。
The receivables belong to the transferor or transferee?
The receivables still belong to the transferor.
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46. Example P65 illustration 2-5 Transferor (borrower): Santa Teresa Glass
Transferee (lender): Finance Bank
Dr. cash ,700
Finance charge expense 财务费用 9,300
Cr. Liability-financing arrangement ,000
负债-融资合同
Finance fee 融资费用: $620,000×1.5%=9,300
Loan: $500,000
Balance 余额: 500,000-9,300=490,700
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Notes payable/short-term borrowing ,000
Signing a note
Without signing a note

47. Example P65 illustration 2-5
Santa collected $400,000 of the receivables in Dec.:
Dr. cash 400,000
Cr. Accounts receivable 400,000
Santa should use the $400,000 to repay the loan borrowing from Finance Bank.
Dr. notes payable 400,000
Cr. Cash ,000
During December, one-month of interest
=$500,000×12%×1/12=$5,000
Dr. Interest expense ,000
Cr. cash ,000
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48. Exercise P87 2-15 Transferor (borrower): High Five Surfboard
Transferee (lender): Equitable Finance Corporation
Dr. cash ,200
Finance charge expense ,800
Cr. Notes payable ,000
Finance fee: $600,000×1.8%=10,800
Loan: $450,000
Balance: 450,000-10,800=439,200
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49. Sale of receivables 应收款的出售
The transferor (seller) sells the receivables to transferee (buyer).
Sale without recourse
Sale of receivables
Sale with recourse
The receivables belong to transferee
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50. Sale without recourse 无追索权的销售
If the sale is made without recourse, the buyer can’t ask the seller for more money if customers don’t pay the receivables.
debtor
债务人
Customer B
Did not pay AR
Sells AR
Creditor
债权人
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Creditor
债权人 A C
Can not ask to pay
transferor
transferee
seller
buyer
Sale without recourse

51. Who takes the risk if customers don’t pay the receivables? A or C?
Sale without recourse
Who takes the risk if customers don’t pay the receivables? A or C?
The transferee (buyer) takes the risk of uncollectibility when accounts receivable are sold without recourse.
当采用无追索权的方式销售应收账款时，买方应承担发生坏账的风险。
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52. Sale without recourse
If it is the sale without resource, the seller (transferor) will do three things:
Removes accounts (or notes) receivable, and any allowance for bad debts associated with them 把应收账款（或应收票据）从账户中剔除，以及剔除与之相关的坏账准备
Recognizes at fair value any assets acquired or liabilities assumed by seller in the transaction 把从交易中获得资产或承担的负债以公允价值确认
Records the difference as a gain or loss 将差额确认为利得或者损失
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53. Seller (transferor): Santa Teresa Glass
Example
Illustration 2-6
Seller (transferor): Santa Teresa Glass
Buyer (transferee): Factor Bank
AR=$600,000
Sale without recourse
AR=$600,000 S F
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buyer
seller
Cash + beneficial interest
$540,000
Fair value - 4% fee
$50,000-$24,000=$26,000
Will be paid now (cash)
Will be paid in the future
(receivable)

54. Example
Removes accounts (or notes) receivable, and any allowance for bad debts associated with them
Recognizes at fair value any assets acquired or liabilities assumed by seller in the transaction
Records the difference as a gain or loss
AR=$600,000 S F
buyer
seller
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Cash + beneficial interest
$540,000
Fair value - 4% fee
$50,000-$24,000=$26,000
Will be paid now (cash)
Will be paid in the future
(receivable)

55. Receivable from factor 26,000 (other receivable)
Example
Dr. Cash ,000
Receivable from factor ,000
(other receivable)
Loss on sale of receivables 34,000
Cr. Accounts receivable ,000
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56. Exercise
P87 E2-16
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57. Sale with recourse 有追索权的销售
If the sale is made with recourse, the buyer can ask the seller for more money if customers don’t pay the receivables.
debtor
债务人
Customer B
Did not pay AR
Sells AR
Creditor
债权人
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Creditor
债权人 A C
Can ask to pay
transferor
transferee
seller
buyer
Sale with recourse

58. Who takes the risk if customers don’t pay the receivables? A or C?
Sale with recourse
Who takes the risk if customers don’t pay the receivables? A or C?
The transferor (seller) retains the risk of uncollectibility when accounts receivable are sold with recourse.
当采用有追索权的方式销售应收账款时，坏账的风险仍归卖方所有。
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59. Sale with recourse
If it is the sale with resource, the seller (transferor) will do four things:
(the same as “sale without recourse”)
The seller should record the estimated fair value of its recourse obligation as a liability.卖方需要估计追索义务的公允价值并将其确认为一项负债。
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60. Estimated fair value of recourse obligation is $5,000.
Example
Illustration 2-7
Sale with recourse
Estimated fair value of recourse obligation is $5,000.
AR=$600,000 S F
buyer
seller
Cash ($540,000)
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Assets
Receivable ($50,000-$24,000=$26,000)
Liability
Recourse liability ($5,000)

61. Receivable from factor 26,000 Loss on sale of receivables 39,000
Example
Dr. Cash ,000
Receivable from factor ,000
Loss on sale of receivables 39,000
Cr. Accounts receivable ,000
recourse liability 追索负债 ,000
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62. If the buyer (Factor Bank) collects all of the receivables,
Example
Illustration 2-7
If the buyer (Factor Bank) collects all of the receivables,
Dr. recourse liability 5,000
Cr. Loss on sale of receivables 5,000
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63. Exercise
P87 E2-17
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64. Questions
What are the differences between: “secured borrowing” and “sale of receivables”?
Secured borrowing: transferor (borrower), transferee (lender)
Sale: transferor (seller), transferee (buyer)
Secured borrowing: receivable belongs to transferor
Sale: receivable belongs to transferee
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65. Questions
What are the differences between: “sale without recourse” and “sale with recourse”?
Without recourse: the transferee (buyer) takes risk if customers don’t pay the receivables.
With recourse: the transferor (seller) takes risk if customers don’t pay the receivables.
Without recourse: three steps in accounting
With recourse: four steps in accounting
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66. 应收票据是债权人（出借人）和债务人（借款人）之间订立的正式的信贷协议。
Notes Receivable
Notes receivable are formal credit arrangements between a creditor (lender) and a debtor (borrower).
应收票据是债权人（出借人）和债务人（借款人）之间订立的正式的信贷协议。
Short-term Notes Receivable: term of a note is no longer than one year. (t≤1)
Notes Receivable
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Long-term Notes Receivable: term of a note is longer than one year. (t>1)

67. Interest-Bearing Notes
On maturity date, we should pay=face amount 面值 (principal 本金) + interest
Interest = face amount × annual rate × (time period of the note/12)
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68. Two companies: Stridewell & Harmon.
Example
P60 illustration 2-4
Two companies: Stridewell & Harmon.
Q1: Which one is creditor (lender)? Which one is debtor (borrower)?
Stridewell is creditor. Harmon is debtor.
Q2: Is it the short-term note or long-term note?
Short-term note (6-month)
Q3: How much is the interest?
Interest=$700,000 × 12% × 6/12=$42,000
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69. When Stridewell received the note on May 1, 2011:
Example
P60 illustration 2-4
When Stridewell received the note on May 1, 2011:
Dr. Note receivable 700,000
Cr. Sales revenue ,000
When Stridewell received cash on Nov. 1, 2011:
Cash=$700,000+$42,000=$742,000
Dr. cash 742,000
Cr. Interest revenue 42,000
Note receivable 700,000
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70. When Harmon signed the note on May 1, 2011: Dr. Inventory 700,000
Example
P60 illustration 2-4
When Harmon signed the note on May 1, 2011:
Dr. Inventory 700,000
Cr. Note payable ,000
When Harmon paid cash on Nov. 1, 2011:
Cash=$700,000+$42,000=$742,000
Dr. Note payable ,000
Interest expense 42,000
Cr. Cash ,000
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71. If Stridewell received the note on August 1, 2011:
Example
P60 illustration 2-4
If Stridewell received the note on August 1, 2011:
Dr. Note receivable 700,000
Cr. Sales revenue ,000
On Dec. 31, 2011, Stridewell recorded the accrual interest:
How much is the interest at the end of 2011:
$700,000 × 6% × (5/12)=$35,000
Dr. Interest receivable 35,000
Cr. Interest revenue ,000
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72. When Stridewell received cash on Feb. 1, 2012: Dr. cash 742,000
Example
P60 illustration 2-4
When Stridewell received cash on Feb. 1, 2012:
Dr. cash 742,000
Cr. Note receivable ,000
Interest receivable 35,000
Interest revenue ,000
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73. Exercise
P86 E2-12
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74. Transfers of notes receivable
The transfer of a note receivable to a financial institution is called discounting.
将应收票据转让给金融机构的行为称为票据的贴现。
The financial institution will charge the seller a financing fee (融资费用) from this transaction.
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75. Transfers of notes receivable
Five steps should be followed:
Record the note receivable on the day when we received the note. 在收到票据当天确认“应收票据”。
Dr. note receivable
Cr. Sales revenue
On the discount date, accrue interest earned on the note receivable prior to its being discounted. 在贴现日，计提应收票据贴现前应收的利息。
Dr. interest receivable
Cr. Interest revenue
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76. Transfers of notes receivable
Five steps should be followed:
Calculate the maturity value of the note. 计算票据的到期价值。
Maturity value=face amount + interest
=face amount + face amount × interest rate × (time period of note/12)
Deduct discount to calculate cash proceeds. 扣除贴现额以计算现金收入。
Cash proceeds=maturity value – discount (financing fee)
=maturity value – maturity value × discount rate × (discount period/12)
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77. Transfers of notes receivable
Five steps should be followed:
On the discount date, remove “note receivable” and “interest receivable”, record “cash” received, then recognize the gain or loss. 在贴现日，剔除已记录的“应收票据”和“应收利息”，记录收到的“现金”，再确认利得或者损失。
Dr. Cash
(or Loss)
Cr. Note receivable
Interest receivable
Gain
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78. Example P69 Illustration 2-8
Record the note receivable on the day when we received the note.
Dr. note receivable 200,000
Cr. Sales revenue ,000
On the discount date, accrue interest earned on the note receivable prior to its being discounted.
The accrued interest=$200,000 × 10% × (3/12)=$5,000
Dr. interest receivable 5,000
Cr. Interest revenue ,000
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79. Example Illustration 2-8 Calculate the maturity value of the note.
Maturity value=face amount + interest
=face amount + face amount × interest rate × (time period of note/12)
=$200,000+$200,000 × 10% × (9/12)
=$215,000
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80. Example Illustration 2-8 Deduct discount to calculate cash proceeds.
Cash proceeds=maturity value – discount (financing fee)
=maturity value – maturity value × discount rate × (discount period/12)
=$215,000 – $215,000 × 12% × (6/12)
=$215,000 – $12,900
=$202,100
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81. Example Dr. cash 202,100 loss 2,900 Cr. note receivable 200,000
interest receivable
Face amount + 3-month’s interest
Discounting (sell) NR
Bank S
Cash
Dr. cash ,100
loss ,900
Cr. note receivable ,000
interest receivable ,000
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82. Exercise
On February 1, 2011, Steal Trucks sold a machine to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12-month, 10% note for the balance. Principal and interest are due at maturity. On August 1, 2011, Steal Trucks discounted the note at the First South Bank at 12% interest.
Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note. 
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83. Exercise
P88 E2-21
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84. The end
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