Presentation is loading. Please wait.

Presentation is loading. Please wait.

PRINCIPLES OF FINANCIAL ACCOUNTING

Published byFay Gordon Modified over 9 years ago

Similar presentations

Presentation on theme: "PRINCIPLES OF FINANCIAL ACCOUNTING"— Presentation transcript:

1 PRINCIPLES OF FINANCIAL ACCOUNTING
Chapter 8

2 Accounts Receivable Issues with bad debts Two methods
Direct write-off Allowance method Advantage of allowance method Matches revenue with expense (adjusting entry is required) More accurate balance on the balance sheet (cash realizable value)

3 Write off of bad debt Direct write-off method Allowance method
DR – +Bad debt expense CR – - A/R Allowance method DR -- +Allowance for Doubtful accounts CR – -A/R

4 Recovery of previously written off account
Direct write-off DR - +A/R CR – -Bad Debt Expense DR – +Cash CR – -A/R Allowance method DR – +A/R CR – +Allowance for Doubtful Accounts

5 Allowance method calculation
Percentage of A/R Flat % on all receivables Aging % times the amount still owed given the age of receivables (page 360) Adjusting entry DR – +Bad debt expense CR – +Allowance for Doubtful Accounts NOTE – amount must be adjusted for the existing balance in the Allowance for Doubtful Accounts account.

6 Notes Receivable Promissory note Simple interest calculation:
Principal, interest, due date Simple interest calculation: Principal x rate x time

7 Receivables analysis Credit risk ratio: Receivable turnover ratio:
Allowance for Doubtful Accts/A-R Receivable turnover ratio: Net Credit sales / Average net receivables Average collection period: 365 / Receivables turnover ratio

8 Methods of speeding up cash-flow
Using receivables as security on a loan (assignment) Selling receivables (factoring) Accepting bank charge cards

9 Assignment E8-3 E8-5 E8-6 E8-13 BYP 8-1 BYP 8-9

Download ppt "PRINCIPLES OF FINANCIAL ACCOUNTING"

Similar presentations

Chapter 7 Accounts and Notes Receivable 7-1. Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. There are two.

Chapter 7 Accounts and Notes Receivable 7-1. Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. There are two.
Allow. for Doubtful Accounts Other Terms Review Potpourri $100100$100100$100100 $200200$200200$200200 $300300$300300$300300 $400400$400400$400400 $500500.

Allow. for Doubtful Accounts Other Terms Review Potpourri $100100$100100$ $200200$200200$ $300300$300300$ $400400$400400$ $
Accounting for Receivables Acct 2210 Chapter 7 (Omit pg 370-373) McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Accounting for Receivables Acct 2210 Chapter 7 (Omit pg ) McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 8 Reporting and Interpreting Receivables, Bad Debt Expense,

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 8 Reporting and Interpreting Receivables, Bad Debt Expense,
Reporting and Interpreting Sales Revenue, Receivables, and Cash Chapter 6 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Reporting and Interpreting Sales Revenue, Receivables, and Cash Chapter 6 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.
ACCOUNTING FOR RECEIVABLES

ACCOUNTING FOR RECEIVABLES
1 © Copyright Doug Hillman 2000 Accounts Receivable and Bad Debts Expense.

1 © Copyright Doug Hillman 2000 Accounts Receivable and Bad Debts Expense.
Reporting and Analysing Receivables CHAPTER 8. Amounts due from individuals and companies that are expected to be collected in cashAmounts due from individuals.

Reporting and Analysing Receivables CHAPTER 8. Amounts due from individuals and companies that are expected to be collected in cashAmounts due from individuals.
Learning Objectives After studying this chapter, you should be able to: Recognize revenue items at the proper time on the income statement. Account for.

Learning Objectives After studying this chapter, you should be able to: Recognize revenue items at the proper time on the income statement. Account for.
© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin Accounting for Receivables Chapter 9 9.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin Accounting for Receivables Chapter 9 9.
Reporting and Analyzing Receivables

Reporting and Analyzing Receivables
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Seven Accounting for Receivables.

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Seven Accounting for Receivables.
Chapter Five Accounting for Receivables and Inventory Cost Flow © 2015 McGraw-Hill Education.

Chapter Five Accounting for Receivables and Inventory Cost Flow © 2015 McGraw-Hill Education.
RECEIVABLES & SALES CHAPTER FIVE.

RECEIVABLES & SALES CHAPTER FIVE.
PRINCIPLES OF FINANCIAL ACCOUNTING

PRINCIPLES OF FINANCIAL ACCOUNTING
Estimating the Amount of Bad Debts Expense pp. 411-417.

Estimating the Amount of Bad Debts Expense pp
BAD DEBTS Chapter 8 p. 407-411. Bad Debts = a term used to describe amounts that cannot be collected The reporting of bad debts is governed by the matching.

BAD DEBTS Chapter 8 p Bad Debts = a term used to describe amounts that cannot be collected The reporting of bad debts is governed by the matching.
Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.

Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
Financial Accounting, Seventh Edition

Financial Accounting, Seventh Edition

Similar presentations

Ads by Google